Regulatory T cells (Tregs) are indispensable for maintaining self-tolerance by suppressing conventional T cells. On the other hand, Tregs promote tumor growth by inhibiting anti-cancer immunity. In this study, we identified that Tregs increase the quorum of self-reactive CD8+ T cells required for the induction of experimental autoimmune diabetes in mice. Their major suppression mechanism is limiting available IL-2, an essential T-cell cytokine. Specifically, Tregs inhibit the formation of a previously uncharacterized subset of antigen-stimulated KLRK1+ IL7R+ (KILR) CD8+ effector T cells, which are distinct from conventional effector CD8+ T cells. KILR CD8+ T cells show a superior cell killing abilities in vivo. The administration of agonistic IL-2 immunocomplexes phenocopies the absence of Tregs, i.e., it induces KILR CD8+ T cells, promotes autoimmunity, and enhances anti-tumor responses in mice. Counterparts of KILR CD8+ T cells were found in the human blood, revealing them as a potential target for immunotherapy.