In tumors associated with inflammation such as inflammatory bowel disease (IBD) and colorectal cancer (CRC), high numbers of regulatory T cells (Tregs) are associated with both favorable and poor prognoses. The functions of Tregs in CRC remain elusive and have yet to be clearly defined. With new evidence supporting many subsets of Tregs, the research on the development and functions of these cells has begun to come to fruition. The sphingosine 1 phosphate (S1P) pathway was recently reported to regulate the development and function of regulatory T cells. This pathway may shine new light into the pleiotropic nature of these cells in cancer. In this review, we will examine current literature on the many functions of Tregs in CRC and highlight the significance of the S1P signaling pathway in Treg development/function with the implication of novel therapeutic strategies in treatment of CRC patients.