Regulatory T (Treg) cells expressing the transcription factor Foxp3 play an important role in maintaining immune homeostasis. Chronic inflammation is associated with reduced Foxp3 expression, function, and loss of phenotypic stability. Previous studies have established the importance of TNF receptor 2 (TNFR2) in the generation and/or activation of Treg cells. In this study, we assess the importance of TNFR2 in healthy mice and under inflammatory conditions. Our findings reveal that, in health, TNFR2 is important not only for the generation of Treg cells, but also for regulating their functional activity. We also show that TNFR2 maintains Foxp3 expression in Treg cells by restricting DNA methylation at the Foxp3 promoter. In inflammation, loss of TNFR2 results in increased severity and chronicity of experimental arthritis, reduced total numbers of Treg cells, reduced accumulation of Treg cells in inflamed joints, and loss of inhibitory activity. In addition, we demonstrate that, under inflammatory conditions, loss of TNFR2 causes Treg cells to adopt a proinflammatory Th17-like phenotype. It was concluded that TNFR2 signaling is required to enable Treg cells to promote resolution of inflammation and prevent them from undergoing dedifferentiation. Consequently, TNFR2-specific agonists or TNF1-specific antagonists may be useful in the treatment of autoimmune disease.