We have previously shown that xenogeneic stromal cell stimulation of naïve T cells resulted in the generation of a new type of regulatory T (Treg) cell termed HOZOT, which has multifunctional properties and a CD4/CD8 double-positive phenotype. Even after the establishment of HOZOT, stromal cells can function as an antigen-presenting cell (APC) by inducing these cells to produce interleukin (IL)-10. When compared with other stimuli, stromal cells showed an IL-10-producing ability comparable to anti-CD3 antibody (Ab) stimulation, and much greater than dendritic cell (DC) stimulation. Distinct from professional APCs, stromal cells express only major histocompatibility complex (MHC) class I and B7-1 costimulatory molecules, and not MHC class II or other costimulatory molecules, such as ICOSL (CD275), PD-L1 (CD274), PD-L2 (CD273), CD40, OX40L (CD252) and 4-1BBL (CD137L) in the absence of stimulation. Blocking experiments revealed that, in addition to anti-H-2K(d) Ab and anti-human CD8 Ab, anti-mouse B7-1 Ab could effectively block IL-10 production, indicating a key role of the B7-1/CD28 pathway. Using stromal cells expressing different levels of B7-1, IL-10 production correlated with the levels of B7-1 expression. Distinct from ICOSL or PD-L1 expressed on DCs (which are regarded as IL-10-inducing costimulatory molecules), this study showed that B7-1 on stromal cells is a key molecule regulating IL-10 production by multifunctional Treg cells, HOZOT.