Intravenous immunoglobulin therapy (IVIG) is the treatment of choice for many immune-mediated diseases, yet its mechanisms of action are incompletely elucidated. We investigated the possibility that IVIG played a direct role in the expansion of regulatory T cells (Treg) that recognize the heavy chain constant region of immunoglobulin G (Fc) as a mechanism for the recovery of Kawasaki disease (KD), a T cell mediated pediatric vasculitis of the coronary arteries. We successfully generated Fc-specific Treg clones from sub-acute KD subjects that did not develop arterial complications after IVIG and defined an unusual functional phenotype: Fc-specific Treg secrete IL-10 and small amounts of IL-4 but not TGF-β. Antigen presentation studies demonstrated that these Treg clones can be activated by autologous B cells that express IgG on their cell surface in the absence of exogenous Fc. The IgG molecule has to be canonically processed and presented by autologous MHC molecules to be recognized by Treg. In support of the importance of this novel Treg population in downsizing vascular inflammation, KD patients with dilated coronary arteries or aneurysms despite IVIG treatment failed to expand Fc-specific Treg. Our results point to a specificity of a previously un-described Treg population for the clinical benefit provided by IVIG therapy in children.