Tetrandrine (TET) is a chemical component derived from the Stephania Tetrandra, a traditional Chinese medicine with anti-inflammatory and immunosuppressive properties. The underlying mechanism of its immunosuppressive effect remains incompletely understood. There is now compelling evidence that CD4⁺Foxp3⁺ regulatory T cells (Tregs) play an indispensable role in the maintenance of immune homeostasis by actively suppressing the activation of effector immune cells. It is also well established that the dendritic cells (DCs) with immunosuppressive property, termed tolerogenic DCs (Tol-DC), are instrumental for the generation and expansion of Tregs. Therefore, we examined the effect of TET on the differentiation of Tol-DCs and its effect on Tregs. We found that, after pre-treatment with non-toxic concentrations of TET, LPS-activated human monocyte-derived DCs failed to mature. TET-treated DCs (TET-DC) expressed high levels of IL-10 and low levels of IL-12, and expressed high levels of ILT3 mRNA, indicative of a typical Tol-DC phenotype. The allostimulatory effect of TET-DC was markedly reduced. Importantly, co-culture with TET-DC, Foxp3 expression by CD4 cells was increased ~2-fold. Intra-peritoneal (i,p.) injection of TET into normal mice, TET treatment also increased the number of functional suppressive Tregs which produced ~4-fold higher IL-10 than Tregs isolated from control mice. Taken together, our study revealed that TET had the capacity to promote the generation of Tol-DC and consequently to expand Tregs. Therefore, induction of immunosuppressive network of Tol-DC and Tregs represent a novel mechanism underlying the anti-inflammatory effect of this Chinese herb-derived naturally occurring compound.