Regulatory T (T(reg)) cells are essential for maintenance of immune homeostasis. Foxp3 is the key transcription factor for T(reg)-cell differentiation and function; however, molecular mechanisms for its negative regulation are poorly understood. Here we show that YY1 expression is lower in T(reg) cells than T(conv) cells, and its overexpression causes a marked reduction of Foxp3 expression and abrogation of suppressive function of Treg cells. YY1 is increased in T(reg) cells under inflammatory conditions with concomitant decrease of suppressor activity in dextran sulfate-induced colitis model. YY1 inhibits Smad3/4 binding to and chromatin remodelling of the Foxp3 locus. In addition, YY1 interrupts Foxp3-dependent target gene expression by physically interacting with Foxp3 and by directly binding to the Foxp3 target genes. Thus, YY1 inhibits differentiation and function of T(reg) cells by blocking Foxp3.