Regulatory T cells (Tregs) are crucial for the maintenance of immunological self-tolerance and their absence or dysfunction can lead to autoimmunity. However, the molecular pathways that govern Treg biology remain obscure. In this study, we show that the nuclear factor-κB signalling mediator mucosa-associated lymphoid tissue lymphoma translocation protein 1 (MALT1) is an important novel regulator of both Tregs originating in the thymus ('natural' or nTregs) and Tregs induced to differentiate from naive thymocyte helper (Th) cells in the periphery ('induced' or iTregs). Our examination of mice deficient for MALT1 revealed that these mutants have a reduced number of total Tregs. In young Malt1-/- mice, nTregs are totally absent and iTreg are diminished in the periphery. Interestingly, total Treg numbers increase in older Malt1-/- mice as well as in Malt1-/- mice subjected to experimentally induced inflammation. iTregs isolated from WT and Malt1-/- mice were indistinguishable with respect to their ability to suppress the activities of effector T cells, but Malt1-/- iTregs expressed higher levels of Toll-like receptor (TLR) 2. Treatment of WT and Malt1-/- Th cells in vitro with the TLR2 ligand Pam3Cys strongly enhanced the induction and proliferation of Malt1-/- iTregs. Our data suggest that MALT1 supports nTreg development in the thymus but suppresses iTreg induction in the periphery during inflammation. Our data position MALT1 as a key molecule that contributes to immune tolerance at steady-state while facilitating immune reactivity under stress conditions.