Regulatory T (Treg) cells that recognize dietary- or microbiota-derived antigens express RORγt and are essential for immune tolerance in the intestine. A recent paradigm shift found these cells require major histocompatibility complex class II (MHCII) on RORγt+ antigen-presenting cells (APCs) rather than conventional dendritic cells (cDCs) for signal one. Here, we evaluate signal two and unexpectedly find that costimulatory molecules B7-1 (CD80) and B7-2 (CD86) antagonize the generation of microbiota-specific RORγt+ Treg cells. Gain-of-function or loss-of-function therapeutics targeting B7 via CTLA-4 exert reciprocal effects on the generation of microbiota-specific RORγt+ Treg cells. This axis was independent of B7 on RORγt+ APCs but required MHCII on this cell type. Finally, CTLA4-Ig treatment restores microbiota-specific RORγt+ Treg cell generation and protects from experimental intestinal inflammation induced by pathobiont colonization with IL-10R signaling blockade. These results define that RORγt+ Treg cells are uniquely restrained by B7 costimulation, while CTLA4-Ig enhances immune tolerance in the intestine when acting cooperatively with RORγt+ APCs.