Regulatory T cells play an important role in autoimmunity and have been shown to exert anti-inflammatory effects in allergic asthma. Mouse model of airway inflammation was used to examine the suppressive activity of luteolin-induced CD4CD25 regulatory T cells (Tregs) in vivo. In this study, BALB/c mice were sensitized with ovalbumin antigen (OVA) by aerosol challenge. Then, various biological processes were examined, including airway eosinophilia; mucus hypersecretion; elevation of OVA-specific IgE, expression of Th2 cytokines and chemokine levels; expression of eotaxin 2 and CCR3; and airway hyper responsiveness (AHR). Luteolin significantly inhibited OVA-induced increase in immune cell and eosinophil counts as well as IL-4, IL-5, IL-13, and eotaxin levels in bronchoalveolar lavage fluid (BAL Fluid). Luteolin and cyclosporine A (CsA) which was a positive control also substantially reduced OVA-specific IgE levels, eotaxin 2 levels, and CCR3 expression in BAL Fluid. In contrast, luteolin significantly increased IL-10 and IFN-γ protein levels, as well as IL-10 and TGF-β1 mRNA expression in the lung. In vitro studies showed that the number of luteolin-induced CD4CD25 Treg (iTreg) cells was higher, with elevated levels of TGF-β1 and foxp3 mRNA expression in lungs tissue. Transfer of iTreg cells into OVA-sensitized mice reduced AHR, eosinophil recruitment, eotaxin, IgE, and Th2 cytokine expressions, and increased IFN-γ production in BAL Fluid after allergen challenge. Furthermore, adoptive transfer of iTreg cells prevented disease in a CD25-depleted mouse asthma model. Luteolin via induction of foxp3 and CD4CD25 Treg cells may represent a new strategy in the development of therapies for managing asthma.