PTPN22 encodes a tyrosine phosphatase that inhibits Src-family kinases responsible for Ag receptor signaling in lymphocytes and is strongly linked with susceptibility to a number of autoimmune diseases. As strength of TCR signal is critical to the thymic selection of regulatory T cells (Tregs), we examined the effect of murine PTPN22 deficiency on Treg development and function. In the thymus, numbers of pre-Tregs and Tregs increased inversely with the level of PTPN22. This increase in Tregs persisted in the periphery and could play a key part in the reduced severity observed in the PTPN22-deficient mice of experimental autoimmune encephalomyelitis, a mouse model of multiple sclerosis. This could explain the lack of association of certain autoimmune conditions with PTPN22 risk alleles.