Regulatory T cells (Tregs) are critical homeostatic components in preventing the development of autoimmunity, and are a major focus for their therapeutic potential for autoimmune diseases. To enhance the efficacy of Tregs in adoptive therapy, we developed a strategy for generating engineered Tregs that have the capacity to target autoimmune T cells in an Ag-specific manner. Using a retroviral expression system encoding Foxp3 and HLA-DR1 covalently linked to the immunodominant peptide of the autoantigen type II collagen (DR1-CII), naive T cells were engineered to become Tregs that express DR1-CII complexes on their surface. When these cells were tested for their ability to prevent the development of collagen induced arthritis, both the engineered DR1-CII-Foxp3 and Foxp3 only Tregs significantly reduced the severity and incidence of disease. However, the mechanism by which these two populations of Tregs inhibited disease differed significantly. Disease inhibition by the DR1-CII-Foxp3 Tregs was accompanied by significantly lower numbers of autoimmune CII-specific T cells in vivo and lower levels of autoantibodies in comparison with engineered Tregs expressing Foxp3 alone. In addition, the numbers of IFN-γ- and IL-17-expressing T cells in mice treated with DR1-CII-Foxp3 Tregs were also significantly reduced in comparison with mice treated with Foxp3 engineered Tregs or vector control cells. These data indicate that the coexpression of class II autoantigen-peptide complexes on Tregs provides these cells with a distinct capacity to regulate autoimmune T cell responses that differs from that used by conventional Tregs.