Regulatory T cell (Treg)-mediated suppression of CD8+ T cells has been implicated in the establishment and maintenance of chronic viral infections, but little is known about the mechanism of suppression. In this study an in vitro assay was developed to investigate the suppression of CD8+ T cells by Friend retrovirus (FV)-induced Tregs. CD4+ CD25+ T cells isolated from mice chronically infected with the FV suppressed the development of effector function in naive CD8+ T cells without affecting their ability to proliferate or up-regulate activation markers. In vitro restimulation was not required for suppression by FV-induced Tregs, correlating with their high activation state in vivo. Suppression was mediated by direct T cell-T cell interactions and occurred in the absence of APCs. Furthermore, suppression occurred irrespective of the TCR specificity of the CD8+ T cells. Most interestingly, FV-induced Tregs were able to suppress the function of CD8+ effector T cells that had been physiologically activated during acute FV infection. The ability to suppress the effector function of activated CTLs is likely a requisite role for Tregs in limiting immunopathology by CD8+ T cells during antiviral immune responses. Such activity may also have adverse consequences by allowing viruses to establish and maintain chronic infections if suppression of antiviral immune responses occurs before virus eradication.