CD4(+)CD25(+) regulatory T cells (Treg), a subpopulation of CD4(+) T cells, regulate immune responses. Foxp3 is a key transcription factor for the development and function of Treg cells. During T-cell activation in vitro, a DNA demethylation agent 5-Aza-2'-deoxycytydine (DAC) can induce Foxp3 expression in CD4(+)CD25(-) Foxp3(-) cells via altering methylation status of a conserved element in the 5'-untranslated region of the Foxp3 gene. However, the effects of this agent on the development of Foxp3(+) Treg cells in the thymus and in vivo are poorly understood. In the present study, a short-term treatment with a low dose of DAC significantly increased the ratios of thymic CD4(+)CD8(-) CD25(+) cells or CD4(+)CD8(-) Foxp3(+) cells to CD4(+)CD8(-) cells, and the total numbers of thymic CD4(+)CD8(-)Foxp3(+) Treg cells or CD4(+)CD8(-)CD25(+)Foxp3(+) Treg cells in the thymus in mice. DAC-treatment induced the Foxp3 expression and the significant demethylation of a CpG island in the first intron of the Foxp3 gene in CD4(+)CD8(-)CD25(+) cells predominantly. Furthermore, CD4(+)CD8(-)CD25(+) thymocytes in DAC-treated mice exhibited enhanced immunosuppressive function than those in control mice. In addition, DAC treatment in vivo was effective in improving the clinical course of diabetes in cyclophosphamide (CY)-potentiated non-obese diabetic mice (CY-NOD). Thus, the in vivo treatment with DAC can significantly promote the development of natural thymic CD4(+)CD25(+)Foxp3(+) Treg cells through Foxp3 demethylation, implicating a therapeutic application of DAC in patients suffering from autoimmune diseases.