T helper (Th)-2 cells are the major players in allergic asthma; however, the mechanisms that control Th2-mediated inflammation are poorly understood. Here we find that enhanced expression of Grail, an E3 ubiquitin ligase, in Th2 cells depends on interleukin (IL)-4-signalling components, signal transducer and activator of transcription 6 (Stat6) and Gata3, that bind to and transactivate the Grail promoter. Grail deficiency in T cells leads to increased expression of Th2 effector cytokines in vitro and in vivo and Grail-deficient mice are more susceptible to allergic asthma. Mechanistically, the enhanced effector function of Grail-deficient Th2 cells is mediated by increased expression of Stat6 and IL-4 receptor α-chain. Grail interacts with Stat6 and targets it for ubiquitination and degradation. Thus, our results indicate that Grail plays a critical role in controlling Th2 development through a negative feedback loop.