Abstract Primary biliary cirrhosis (PBC) is an enigmatic disease mediated by autoimmune destruction of cholangiocytes in hepatic bile ducts. Early immunological events in PBC are poorly understood; clinical signs of disease occur very late in the pathological process. We have used our unique murine model of PBC in dominant-negative TGF-β receptor type II transgenic mice to delineate critical early immunopathological pathways, and previously showed that dnTGFβRII CD8 T cells alone transfer biliary disease. Herein we report significantly increased numbers of hepatic terminally differentiated (KLRG1+) CD8 T cells in dnTGFβRII compared to B6; these cells are the major cytotoxic CD8 subset. Unexpectedly, the disease is not simply CD8 T cell intrinsic since mixed bone marrow chimeric mice were protected from biliary disease. Adoptive transfer studies showed that co-transfer of B6 but not dnTGFβRII Tregs prevented dnTGFβRII CD8 T cell mediated cholangitis; the protection was associated with decreased numbers of hepatic KLRG1+ CD8 T cells and with elimination of hepatic dnTGFβRII CD8 mediated cholangiocyte cytotoxicity. DnTGFβRII Treg cells were inferior in suppressing effector CD8 T cells in vitro compared to wild type B6 Tregs. In conclusion, these results emphasize that autoimmune cholangitis requires defects in both the T effector and regulatory compartments, which has important implications for understanding the early pathogenesis of human PBC.