Regulatory T (Treg) lymphocytes play a central role in the control of immune responses and so maintain immune tolerance and homeostasis. In mice, expression of the CD8 co-receptor and low levels of the co-stimulatory molecule CD28 characterizes a Treg cell population that exerts potent suppressive function in vitro and efficiently controls experimental immunopathology in vivo. It has remained unclear if CD8(+) CD28(low) Treg cells develop in the thymus or represent a population of chronically activated conventional T cells differentiating into Treg cells in the periphery, as suggested by their CD28(low) phenotype. We demonstrate that functional CD8(+) CD28(low) Treg cells are present in the thymus and that these cells develop locally and are not recirculating from the periphery. Differentiation of CD8(+) CD28(low) Treg cells requires MHC class I expression on radioresistant but not on haematopoietic thymic stromal cells. In contrast to other Treg cells, CD8(+) CD28(low) Treg cells develop simultaneously with CD8(+) CD28(high) conventional T cells. We also identified a novel homologous naive CD8(+) CD28(low) T-cell population with immunosuppressive properties in human blood and thymus. Combined, our data demonstrate that CD8(+) CD28(low) cells can develop in the thymus of mice and suggest that the same is true in humans.