Work by our group and others has demonstrated a role for the extracellular matrix receptor CD44 and its ligand hyaluronan in CD4+ CD25+ regulatory T cell (Treg) function. Herein, we explore the mechanistic basis for this observation. Using mouse FoxP3/GFP+ Treg, we find that CD44 costimulation promotes expression of FoxP3, in part through production of IL-2. This promotion of IL-2 production was resistant to cyclosporin A treatment, suggesting that CD44 costimulation may promote IL-2 production through bypassing FoxP3-mediated suppression of NFAT. CD44 costimulation increased production of IL-10 in a partially IL-2-dependent manner and also promoted cell surface TGF-β expression. Consistent with these findings, Treg from CD44 knockout mice demonstrated impaired regulatory function ex vivo and depressed production of IL-10 and cell surface TGF-β. These data reveal a novel role for CD44 cross-linking in the production of regulatory cytokines. Similar salutary effects on FoxP3 expression were observed upon costimulation with hyaluronan, the primary natural ligand for CD44. This effect is dependent upon CD44 cross-linking; while both high-molecular-weight hyaluronan (HA) and plate-bound anti-CD44 Ab promoted FoxP3 expression, neither low-molecular weight HA nor soluble anti-CD44 Ab did so. The implication is that intact high-molecular weight HA can cross-link CD44 only in those settings where it predominates over fragmentary LMW-HA, namely, in uninflamed tissue. We propose that intact but not fragmented extracellular is capable of cross-linking CD44 and thereby maintains immunologic tolerance in uninjured or healing tissue.