Immune tolerance between the fetus and mother represents an active process by which the developing fetus must not mount immune responses to noninherited Ags on chimeric maternal cells that reside in fetal tissue. This is, in part, mediated by the suppressive influence of CD4+FOXP3+CD25+ regulatory T cells (Tregs). Fetal secondary lymphoid organs have an increased frequency of Tregs and, as compared with adult T cells, fetal naive CD4+ T cells exhibit a strong predisposition to differentiate into Tregs when stimulated. This effect is mediated by the TCR and TGF-β pathways, and fetal T cells show significantly increased Treg differentiation in response to anti-CD3 and TGF-β stimulation. Naive fetal T cells also exhibit increased signaling through the TGF-β pathway, with these cells demonstrating increased expression of the signaling mediators TGF-βRI, TGF-βRIII, and SMAD2, and higher levels of SMAD2/SMAD3 phosphorylation. Increased fetal Treg differentiation is mediated by the RNA-binding protein Lin28b, which is overexpressed in fetal T cells as compared with adult cells. When Lin28b expression is decreased in naive fetal T cells, they exhibit decreased Treg differentiation that is associated with decreased TGF-β signaling and lowered expression of TGF-βRI, TGF-βRIII, and SMAD2. Lin28b regulates the maturation of let-7 microRNAs, and these TGF-β signaling mediators are let-7 targets. We hypothesize that loss of Lin28b expression in fetal T cells leads to increased mature let-7, which causes decreased expression of TGF-βRI, TGF-βRIII, and SMAD2 proteins. A reduction in TGF-β signaling leads to reduced Treg numbers.