Regulatory T (Treg) cells, characterized by expression of the transcription factor forkhead box P3 (Foxp3), maintain immune homeostasis by suppressing self-destructive immune responses1, 2, 3, 4. Foxp3 operates as a late-acting differentiation factor controlling Treg cell homeostasis and function5, whereas the early Treg-cell-lineage commitment is regulated by the Akt kinase and the forkhead box O (Foxo) family of transcription factors6, 7, 8, 9, 10. However, whether Foxo proteins act beyond the Treg-cell-commitment stage to control Treg cell homeostasis and function remains largely unexplored. Here we show that Foxo1 is a pivotal regulator of Treg cell function. Treg cells express high amounts of Foxo1 and display reduced T-cell-receptor-induced Akt activation, Foxo1 phosphorylation and Foxo1 nuclear exclusion. Mice with Treg-cell-specific deletion of Foxo1 develop a fatal inflammatory disorder similar in severity to that seen in Foxp3-deficient mice, but without the loss of Treg cells. Genome-wide analysis of Foxo1 binding sites reveals ~300 Foxo1-bound target genes, including the pro-inflammatory cytokine Ifng, that do not seem to be directly regulated by Foxp3. These findings show that the evolutionarily ancient Akt–Foxo1 signalling module controls a novel genetic program indispensable for Treg cell function.