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ICOS is induced in activated T cells and its main role is to boost differentiation and function of effector T cells. ICOS is also constitutively expressed in a subpopulation of Foxp3+ regulatory T cells under steady-state condition. Studies using ICOS germline knockout mice or ICOS-blocking reagents suggested that ICOS has supportive roles in regulatory T (Treg) cell homeostasis, migration, and function. To avoid any compounding effects that may arise from ICOS-deficient non–Treg cells, we generated a conditional knockout system in which ICOS expression is selectively abrogated in Foxp3-expressing cells (ICOS FC mice). Compared to Foxp3-Cre control mice, ICOS FC mice showed a minor numerical deficit of steady-state Treg cells but did not show any signs of spontaneous autoimmunity, indicating that tissue-protective Treg populations do not heavily rely on ICOS costimulation. However, ICOS FC mice showed more severe inflammation in oxazolone-induced contact hypersensitivity, a model of atopic dermatitis. This correlated with elevated numbers of inflammatory T cells expressing IFN-γ and/or TNF-α in ICOS FC mice compared with the control group. In contrast, elimination of ICOS in all T cell compartments negated the differences, confirming that ICOS has a dual positive role in effector and Treg cells. Single-cell transcriptome analysis suggested that ICOS-deficient Treg cells fail to mature into T-bet+CXCR3+ “Th1-Treg” cells in the draining lymph node. Our results suggest that regimens that preferentially stimulate ICOS pathways in Treg cells might be beneficial for the treatment of Th1-driven inflammation.