Resolution of experimental autoimmune encephalomyelitis requires a large cohort of Foxp3+ regulatory T cells (Tregs) within the CNS. In this study, we have used the passive transfer of murine experimental autoimmune encephalomyelitis using myelin-reactive T cells to study the development of this Treg response. Rapid proliferation of Tregs within the CNS (which is not seen in lymphoid organs) drives a switch in the balance of CNS proliferation from T effectors to Tregs, correlating with recovery. This proliferative burst drives a local over-representation of Vβ8+ Tregs in the CNS, indicative of an oligoclonal expansion. There is also evidence for a small, but detectable, myelin oligodendrocyte glycoprotein-reactive Treg component expanded without prior immunization. Furthermore, CNS-derived Tregs, taken during recovery, suppressed the proliferation of CNS-derived effectors in response to myelin oligodendrocyte glycoprotein. Under these conditions, Tregs could also limit the level of IFN-γ production, but not IL-17 production, by CNS-derived effectors. These data establish the CNS as an environment that permits extensive Treg proliferation and are the first to demonstrate Treg expansion specifically within the tissues during the natural resolution of autoimmune inflammation.