Peripheral regulatory T (pTreg) cells are a key T cell lineage for mucosal immune tolerance and anti-inflammatory responses, and interleukin-2 receptor (IL-2R) signaling is critical for Tregcell generation, expansion, and maintenance. The expression of IL-2R on pTregcells is tightly regulated to ensure proper induction and function of pTregcells without a clear molecular mechanism. We here demonstrate that Cathepsin W (CTSW), a cysteine proteinase highly induced in pTregcells under transforming growth factor–β stimulation is essential for the restraint of pTregcell differentiation in an intrinsic manner. Loss of CTSW results in elevated pTregcell generation, protecting the animals from intestinal inflammation. Mechanistically, CTSW inhibits IL-2R signaling in pTregcells by cytosolic interaction with and process of CD25, repressing signal transducer and activator of transcription 5 activation to restrain pTregcell generation and maintenance. Hence, our data indicate that CTSW acts as a gatekeeper to calibrate pTregcell differentiation and function for mucosal immune quiescence.