Germinal center (GC) responses potentiate the generation of follicular regulatory T (T-FR) cells. However, the molecular cues driving T-FR cell formation remain unknown. Here, we show that sclerostin domain-containing protein 1 (SOSTDC1), secreted by a subpopulation of follicular helper T (T-FH) cells and T-B cell border-enriched fibroblastic reticular cells, is developmentally required for T-FR cell generation. Fate tracking and transcriptome assessment in reporter mice establishes SOSTDC1-expressing T-FH cells as a distinct T cell population that develops after SOSTDC1(-)T(FH) cells and loses the ability to help B cells for antibody production. Notably, Sostdcl ablation in T-FH cells results in substantially reduced T-FR cell numbers and consequently elevated GC responses. Mechanistically, SOSTDC1 blocks the WNT-beta-catenin axis and facilitates T-FR cell differentiation.