Thymic stromal lymphopoietin (TSLP) is an essential cytokine for the initiation and development of allergic inflammation. In this study, we have investigated the role of TSLP in the breakdown of immune tolerance and generation of inducible regulatory T cells (iTregs). Our results demonstrated that TSLP diverted airway tolerance against OVA to Th2 sensitization and inhibited the generation of OVA-specific iTregs. TSLP exerted a direct inhibitory effect on both human and mouse iTreg development in vitro. Low doses of TSLP were capable of inhibiting iTreg induction without significantly promoting Th2 development, indicating that these two functions of TSLP are separable. Moreover, the TSLP-mediated inhibition of iTreg generation was only partially dependent on IL-4 and Stat6, and was effective when TSLP was present for the first 24 h of T cell activation. These results define a novel role for TSLP in regulating the balance of airway tolerance and allergic inflammation.