Exact mechanism of action of umbilical cord blood (CB)-derived regulatory T cells (Tregs) in the prevention of GVHD remains unclear. On the basis of selective overexpression of peptidase inhibitor 16 in CB Tregs, we explored the related p53 pathway, which has been shown to negatively regulate miR15a/16 expression. Significantly lower levels of miR15a/16 were observed in CB Tregs when compared with conventional CB T cells (Tcons). In a xenogeneic GVHD mouse model, lower levels of miR15a/16 were also found in Treg recipients, which correlated with a better GVHD score. Forced overexpression of miR15a/16 in CB Tregs led to inhibition of FOXP3 and CTLA4 expression and partial reversal of Treg-mediated suppression in an allogeneic mixed lymphocyte reaction that correlated with the reversal of FOXP3 demethylation in CB Tregs. On the other hand, miR15a/16 knockdown in CB Tcons led to expression of FOXP3 and CTLA4 and suppression of allogeneic lymphocyte proliferation. Using a luciferase-based mutagenesis assay, FOXP3 was determined to be a direct target of miR15a and miR16. We propose that miR15a/16 has an important role in mediating the suppressive function of CB Tregs and these microRNAs may have a ‘toggle-switch’ function in Treg/Tcon plasticity.