Sphingosine-1 phosphate receptor 1 (S1P1) is critical for the egress of T and B cells out of lymphoid organs. Although S1P1 agonist fingolimod is currently used for the treatment of multiple sclerosis (MS) little is known how S1P1 signaling regulates Th17 and Treg cell homeostasis. To study the impact of S1P1 signaling on Th17 and Treg cell biology, we specifically deleted S1P1 in Th17 and Treg cells using IL-17A (Cre) and Foxp3 (Cre) mice, respectively. Deletion of S1P1 in Th17 cells conferred resistance to experimental autoimmune encephalomyelitis (EAE). On the other hand, permanent deletion of S1P1 in Treg cells resulted in autoimmunity and acute deletion rendered mice more susceptible to EAE. Importantly, our study revealed that S1P1 not only regulated the egress of Treg cells out of lymphoid organs and subsequent non-lymphoid tissue distribution but also their phenotypic diversity. Most of the Treg cells found in S1P1-deficient mice as well as MS patients on fingolimod therapy had an activated phenotype and were more prone to apoptosis, thus converted to effector Treg. Our results provide novel insight into the functions of S1P1 and potential impact of long term fingolimod use on Th17 and Treg cell biology and general health in MS patients.