T-cell acute lymphoblastic leukemia (T-ALL) frequently involves aberrant expression of TAL1 (T-cell acute lymphocytic leukemia 1) and LMO2, oncogenic members of the TAL1 transcriptional complex. Transcriptional activity of the TAL1-complex is thought to have a pivotal role in the transformation of thymocytes and is associated with a differentiation block and self-renewal. The transcription factor Forkhead Box P3 (FOXP3) was recently described to be expressed in a variety of malignancies including T-ALL. Here we show that increased FOXP3 levels negatively correlate with expression of genes regulated by the oncogenic TAL1-complex in human T-ALL patient samples as well as a T-ALL cell line ectopically expressing FOXP3. In these cells, FOXP3 expression results in altered regulation of cell cycle progression and reduced cell viability. Finally, we demonstrate that FOXP3 binds LMO2 in vitro, resulting in decreased interaction between LMO2 and TAL1, providing a molecular mechanism for FOXP3-mediated transcriptional modulation in T-ALL. Collectively, our findings provide initial evidence for a novel role of FOXP3 as a tumor suppressor in T-ALL through modulation of TAL1 transcriptional activity.