Pigment Epithelium-derived Factor (PEDF) is a widely expressed 50kD glycoprotein belonging to the serine protease inhibitor family with well-established anti-inflammatory functions. Recently, we demonstrated the immunoregulatory role played by PEDF in dry eye disease (DED) by suppressing the maturation of antigen-presenting cells at the ocular surface following exposure to the desiccating stress. In this study, we evaluate the effect of PEDF on the immunosuppressive characteristics of regulatory T-cells (Tregs), which are functionally impaired in DED. The in vitro cultures in presence of PEDF prevented pro-inflammatory cytokine (associated with T-helper 17 cells) induced loss of frequency and suppressive phenotype of Tregs derived from normal mice. Similarly, PEDF maintained the in vitro frequency and enhanced the suppressive phenotype of Tregs derived from DED mice. On systemically treating DED mice with PEDF, moderately higher frequencies and significantly enhanced suppressive function of Tregs was observed in the draining lymphoid tissues, leading to the efficacious amelioration of the disease. Our results demonstrate, that PEDF promotes the suppressive capability of Tregs and attenuates their Th17 mediated dysfunction in DED, thereby playing a role in the suppression of DED.