Th1 immune responses are crucial for eliminating Leishmania parasites. However, despite strong Th1 responses, cutaneous leishmaniasis (CL) patients infected with L. braziliensis develop the disease, while milder Th1 responses are found in sub-clinical (SC) infections. Therefore, CL patients may experience impaired regulatory T cell (Treg) function, causing excessive Th1 responses and tissue damage. To address this hypothesis, we characterized the function of circulating Tregs in L. braziliensis infected CL patients and compared them to Tregs from uninfected controls (UC) and SC subjects. The frequency of circulating Tregs was similar in CL patients, UC and SC subjects. Moreover, CL patients Tregs suppressed lymphocyte proliferation and PBMC pro-inflammatory cytokine production more efficiently than UC Tregs, and also produced higher levels of IL-10 than UC and SC Tregs. Furthermore, PBMC and mononuclear cells from lesions of CL patients responded normally to Treg-induced suppression. Therefore, the lesion development in CL patients infected with L. braziliensis is not associated with impairment in Treg function or failure of cells to respond to immunomodulation. Rather, the increased Treg activation in CL patients may impair parasite elimination, resulting in establishment of chronic infection. Thus, immunological strategies that interfere with this response may improve leishmaniasis treatment.