Distinct subsets of Tregs reside in nonlymphoid tissues where they mediate unique functions. To interrogate the biology of tissue Tregs in human health and disease, we phenotypically and functionally compared healthy skin Tregs with those in peripheral blood, inflamed psoriatic skin, and metastatic melanoma. The mitochondrial enzyme, arginase 2 (ARG2), was preferentially expressed in Tregs in healthy skin, increased in Tregs in metastatic melanoma, and reduced in Tregs from psoriatic skin. ARG2 enhanced Treg suppressive capacity in vitro and conferred a selective advantage for accumulation in inflamed tissues in vivo. CRISPR-mediated deletion of this gene in primary human Tregs was sufficient to skew away from a tissue Treg transcriptional signature. Notably, the inhibition of ARG2 increased mTOR signaling, whereas the overexpression of this enzyme suppressed it. Taken together, our results suggest that Tregs express ARG2 in human tissues to both regulate inflammation and enhance their metabolic fitness.