IL-10-producing CD4(+) type 1 regulatory T (Tr1) cells play a critical role in the maintenance of peripheral tolerance. Although immunosuppressive drugs, cytokines, costimulatory molecules, and immature dendritic cells are implicated in the induction of Tr1 cells, the signals that negatively regulate the generation and function of Tr1 cells have been elusive. We report that OX40 ligand (OX40L) completely inhibited the generation of IL-10-producing Tr1 cells from naïve and memory CD4(+) T cells induced by the immunosuppressive drugs dexamethasone and vitamin D3. This unique function of OX40L was not shared by two costimulatory TNF family members, GITR ligand and 4-1BB ligand. OX40L strongly inhibited the generation of IL-10-producing Tr1 cells induced by two physiologic stimuli, the inducible costimulatory ligand and immature dendritic cells. In addition, OX40L strongly inhibited IL-10 production and suppressive function of differentiated IL-10-producing Tr1 cells. These two novel functions of OX40L shed light on the mechanism by which OX40/OX40L regulates immunity and tolerance.