Reciprocal differentiation of immunosuppressive CD4CD25FoxP3 T regulatory cells (Tregs) and proinflammatory IL-17-producing cells (Th17) from naïve CD4 cells is contingent upon the cytokine environment. Using MACS-purified CD4 cells, we found that rapamycin and cyclosporine A (CsA) potently inhibited the TGFβ and IL-6-induced generation of IL-17-producing cells. Intriguingly, rapamycin promoted, while CsA markedly inhibited, TGFβ-mediated generation of Tregs. The aforementioned effects of rapamycin and CsA were also observed for Flow-sorted CD4CD25 T cells, indicating that the effect of these two immunosuppressive agents was based on their action on de novo generation of Tregs and Th17 cells from naïve CD4 cells. Our observation suggests a distinct mode of immunosuppressive action and tolerance induction by rapamycin and CsA. The capacity of rapamycin to generate immunosuppressive Tregs and to suppress differentiation of pathogenic Th17 cells furthers our understanding of the basis for the therapeutic immunosuppressive effects of rapamycin in patients with autoimmune diseases and allo-transplantation reactions.