CD4+ regulatory T cells (Treg cells) are essential for immune tolerance1. Peripherally induced Treg cells (pTreg cells) complement thymic Treg cells by broadening Treg cell reactivity in response to a changing antigenic landscape2. Although both TGFβ and IL-2 synergistically promote functional pTreg cell development in vitro3–6, their combined roles in inducing pTreg cell generation in vivo have not been exploited for tolerizing immunotherapy. Here we designed an IL-2–TGFβ ‘surrogate’ co-agonist by creating a single-chain fusion protein between IL-2 and a low-affinity TGFβ mimic agonist derived from a helminth parasite7. This IL-2–TGFβ surrogate functions as an AND-gated co-agonist and enabled simultaneous cis-activation of IL-2–STAT5 and TGFβ–SMAD2/3 signalling specifically in T cells that express IL-2 receptors. The IL-2–TGFβ surrogate agonist robustly induced antigen-specific, functional and stable pTreg cells in vivo within peripheral lymphoid organs in mice immunized with ovalbumin (OVA) and myelin oligodendrocyte glycoprotein (MOG)35–55. The induced pTreg cells display an effector-like, actively expanding state with high RORγt expression, enabling efficient migration and suppression of intestinal inflammation. Treatment with this agonist effectively quelled immune activation in mouse models of allergen-induced allergic inflammation and self-antigen-driven autoimmune neuroinflammation, suggesting a strategy for the induction of antigen-specific pTreg cells in vivo to establish immune tolerance in inflammatory, allergic and autoimmune diseases.