We explored the function of endogenous type I interferons (IFN-1) in the colon using the T cell adoptive transfer model of colitis. Colon mononuclear phagocytes (MP) constitutively produced IFN-1 in a TRIF-dependent manner. Transfer of CD4+CD45RBhi T cells from wild type (WT) or interferon α/β receptor subunit 1 knockout (IFNAR1−/−) mice into RAG−/− hosts resulted in similar onset and severity of colitis. In contrast, RAG−/− x IFNAR1−/− double knockout (DKO) mice developed accelerated severe colitis compared to RAG−/− hosts when transferred WT CD4+CD45RBhi T cells. IFNAR signaling on host hematopoietic cells was required to delay colitis development. MPs isolated from the colon lamina propria of IFNAR1−/− mice produced less IL-10, IL-1 receptor antagonist (IL-1RA) and IL-27 compared to WT MPs. Accelerated colitis development in DKO mice was characterized by early T cell proliferation and accumulation of CD11b+CD103− dendritic cells in the mesenteric lymph nodes, both of which could be reversed by systemic administration of IL-1RA (anakinra). Co-transfer of CD4+CD25+ regulatory T cells (Tregs) from WT or IFNAR1−/− mice prevented disease caused by CD4+CD45RBhi T cells. However, WT CD4+CD25+Foxp3GFP+ Tregs co-transferred with CD4+CD45RBhi T cells into DKO hosts failed to expand or maintain Foxp3 expression and gained effector functions in the colon. These data are the first to demonstrate an essential role for IFN-1 in the production of anti-inflammatory cytokines by gut MPs and the indirect maintenance of intestinal T cell homeostasis by both limiting effector T cell expansion and promoting Treg stability.