T helper type 2 (Th2) cells are critical to host defence against helminth infection and the pathogenesis of allergic diseases. The differentiation of Th2 cells from naive CD4 T cells is controlled by intricate transcriptional mechanisms. At the precursor stage of naive CD4 T cells, transcriptional mechanisms maintain the potential and in the meantime prevent spontaneous differentiation to Th2 fate. In addition, intrachromosomal interactions important for co-ordinated expression of Th2 cytokines pre-exist in naive CD4 T cells. Upon T-cell receptor (TCR) engagement, naive CD4 T cells are induced by polarizing signals of the interleukin-4/Stat6 and Jagged/Notch pathways to up-regulate the expression of GATA-3. Once up-regulated, GATA-3 drives Th2 and suppresses Th1 differentiation in a cell autonomous fashion. In this stage of differentiation, the Th2 cytokine locus, as well as the interferon-γ locus, undergoes chromatin remodelling and epigenetic modifications that contribute to the somatic memory of Th2 cytokine gene expression pattern. Once differentiated, Th2 effector cells promptly produce Th2 cytokines upon TCR stimulation, which is regulated by concerted actions of GATA-3, TCR signalling, enhancers and the Th2 locus control region. This review provides a detailed account of the transcriptional regulatory events at these different stages of Th2 differentiation.