Rationale: T-regulatory cells (Tregs) are potent immunomodulators in allergic asthma. Objectives: We evaluated the functional effects of Tregs, by adoptively transferring naturally occurring CD4⁺CD25⁺ T- regulatory cells (NTregs) and CD4⁺CD25^- inducible T-regulatory cells (iTregs) from lung and spleens of GFP-transgenic Balb/c mice into cockroach-sensitized and challenged mice. Methods: GFP-labeled NTregs and iTregs were adoptively transferred into cockroach-sensitized and challenged mice. AHR to methacholine was examined using a singlechamber, whole-body plethysmograph and invasive tracheostomy. Measurements and main results: Adoptive transfer of either Ntregs or iTregs from lung or spleen reversed airway inflammation and AHR to methacholine, and the effect lasted for at least four weeks. GFP-labeled iTregs up-regulated CD25 and Foxp3, and migrated to lymph node and lung. Lung CD4⁺CD25⁺ T-cells isolated from each group of recipients mice were ICOS^high and PD-1-positive; however, higher expression of PD-1 was found in the spleen iTregs (S25-) and lung iTregs (L25-) groups. Higher levels of TGF- and IL-10 mRNA transcripts, and BALF IL-10 and INF- levels were observed in lung CD4⁺CD25⁺ cells from the L25^- and S25^- cell-recipient mice than from lung NTregs (L25⁺) and spleen NTregs (S25⁺) cell recipient mice. Adoptive transfer of either cell type significantly reduced BALF IL-4, IL-5 and IL-13 levels. Conclusion: Tregs reverse AHR and airway inflammation; however iTregs that differentiated into T_R1 cells in the lung exert their suppressive activity likely by higher levels of TGF-, IL-10, IFN- and elevated levels of PD-1 compared to NTregs. Hence, PD-1 may be a conduit for reversing AHR by Tregs and a plausible target for treating asthma.