TGFβ is highly abundant in the intestine and induces the expression of CD103 on T cells. Here we show that deletion of the TGFβRI on CD11c+ cells leads to a selective defect in CD103+CD11b+ DCs in the small and large intestinal mucosa, with preserved numbers of CD103-CD11b+ DCs. The defect in CD103+CD11b+ DCs was cell intrinsic and was not due to altered migration of intestinal DCs, as identical reductions occurred in mucosa and draining lymph nodes. Isolated downregulation of CD103 does not explain the apparent defect, as microarray and phenotypic analyses showed reduced expression of other markers normally specific to this population, including Siglec F and TREM-1. Preliminary studies indicate that CD11b+ DCs from CD11c-cre-TGFβRI mice have a defective ability to induce the generation of FoxP3+ Treg. Together our data indicate that TGFβ plays a crucial role in the terminal differentiation of potentially tolerogenic CD103+CD11b+ DCs from a CD103-CD11b+ precursor in the intestine.