The T cell-specific adaptor protein (TSAd), encoded by the gene, is an intracellular molecule that binds Lck to elicit signals that result in cytokine production in CD4 T effector cells (Teff). Nevertheless, using Sh2d2a knockout (KO; also called TSAd) mice, we find that alloimmune CD4 Teff responses are fully competent in vivo. Furthermore, and contrary to expectations, we find that allograft rejection is accelerated in KO recipients of MHC class II-mismatched B6.C-H-2 heart transplants versus wild-type (WT) recipients. Also, KO recipients of fully MHC-mismatched cardiac allografts are resistant to the graft-prolonging effects of costimulatory blockade. Using adoptive transfer models, we find that KO T regulatory cells (Tregs) are less efficient in suppressing Teff function and they produce IFN-γ following mitogenic activation. In addition, pyrosequencing demonstrated higher levels of methylation of CpG regions within the Treg-specific demethylated region of KO versus WT Tregs, suggesting that TSAd, in part, promotes Treg stability. By Western blot, Lck is absent in the mitochondria of KO Tregs, and reactive oxygen species production by mitochondria is reduced in KO versus WT Tregs. Full transcriptomic analysis demonstrated that the key mechanism of TSAd function in Tregs relates to its effects on cellular activation rather than intrinsic effects on mitochondria/metabolism. Nevertheless, KO Tregs compensate for a lack of activation by increasing the number of mitochondria per cell. Thus, TSAd serves as a critical cell-intrinsic molecule in CD4Foxp3 Tregs to regulate the translocation of Lck to mitochondria, cellular activation responses, and the development of immunoregulation following solid organ transplantation.