Leprosy is one of the dreaded infectious diseases haunting the mankind for older ages. Owing to tremendous scientific advancements we now gradually understand the dysregulation of immunological networks in driving the pathogenesis of leprosy. As we move from borderline, tuberculoid to lepromatous patients we found a gradual increase in the proportion of M. leprae specific CD4⁺TCRγδ⁺ cells. Interestingly, CD4⁺TCRγδ⁺ cells isolated from lepromatous patients significantly reduced the proliferation of CD4⁺CD25^- cells in co-culture experiments draw out attention towards the immune- suppressive nature of these cells. Furthermore, we have also evaluated TGF-β mediated SMAD3 signaling and induction of FoxP3 inside these cells. We observed comparatively increased nuclear ingress of SMAD3 in lepromatous patients as compared to SMAD7 in tuberculoid patients. Thus, the induction of FoxP3 in CD4+TCRγδ+ was found to associate with the severity of disease. To establish this molecular event further, we silenced SMAD3 in these cells in the culture. A remarkable reduction of FoxP3 and a concomitant increase in the proliferation of CD4⁺CD25^- cells in co-culture proved the operation of TGF-β mediated SMAD3 signaling towards the induction of FoxP3 in these cells. This study for the first time reveals the role of CD4⁺TCRγδ⁺ cells in the progression of disease.This study added a new dimension of immune suppression with the progression of leprosy. Also, for the first time we have explored the Th3 dependent TGF-β induced SMAD3 signaling inside CD4⁺TCRγδ⁺ cells with the progression of leprosy