HTLV-1 is a human retrovirus that is associated with the neuroinflammatory disorder HTLV-1 associated myelopathy/tropical spastic paraparesis (HAM/TSP). In these patients, HTLV-1 is primarily found in the CD4(+)CD25(+) T cell subset (Regulatory T cells:Tregs), which is responsible for peripheral immune tolerance and is known to be dysfunctional in HAM/TSP. Recent evidence suggests that FoxP3 expression and function is determined epigenetically through DNA demethylation in the Treg-specific demethylated region (TSDR). We analyzed the methylation of the TSDR in PBMCs, CD4(+) T cells, and CD4(+)CD25(+) T cells from normal healthy donors (NDs) and HAM/TSP patients. We demonstrated that there is decreased demethylation in analyzed PBMCs and CD4(+)CD25(+) T cells from HAM/TSP patients as compared to NDs. Furthermore, decreased TSDR demethylation was associated with decreased functional suppression by Tregs. Additionally, increased HTLV-1 Tax expression in HAM/TSP PBMC culture correlated with a concomitant decline in FoxP3 TSDR demethylation. Overall, we suggest that HTLV-1 infection decreases Treg functional suppressive capacity in HAM/TSP through modification of FoxP3 TSDR demethylation and that dysregulated Treg function may contribute to HAM/TSP disease pathogenesis.