Here's typically why a compressor regulator leaks, and what you can do about it.
If doesn't happen often, but when it does, it wastes air and causes your air compressor to cycle more frequently than necessary.
If you are not certain about what component on your air compressor is the air regulator, here is a complete overview for you.
Why? The reason is that air regulators are designed to vent, or relieve, downstream pressure that is higher than the new regulator setting.
If your regulator was set at 125 PSI for example, and you wanted to dial down the setting to 100 PSI, you would have air in the air line at 125 PSI. By venting that higher air pressure out of the regulator relief hole, the downstream air pressure would drop quickly to the 100 PSI of the new regulator setting.
It is this venting process that suggests that your regulator is leaking, and it's not. It is operating normally at this point.
Most regulators have a diaphragm inside them. It is on this diaphragm that the air pressure, in the line from the tank to the air tool, acts. We'll not discuss this operation of the air regulator further here, as this is covered in the information page on air regulators linked from earlier in this article.
Whether it be a reaction to the compressor lubricating oils, which are not compatible with many forms of rubber, or just stress from too many cycles, sometimes this diaphragm inside the regulator cracks and leaks. A typical air regulator diaphragm is shown in this next image.
When this diaphragm cracks, air can flow through it, up the regulator housing, and out of the relieving hole. This will happen all the time the compressor is running or not. Air will leak until the pressure in the tank drops to the cut in level, the compressor will start, and since the crack in the regulator diaphragm typically isn't a large one, the tank will fill to cut out and the compressor motor will stop. The leak will continue, however. The cycle will repeat.
Depending on the size of the regulator in question, and whether it's a low-cost, made-in-China chunk of crap, you may not be able to get parts for the regulator to enable you to disassemble it and replace the diaphragm.
That being the case, it's time to replace the regulator. The mini-regulators are available from many locations including on line, and are not expensive. Better replace it I say, than waste the time and energy trying to find parts, and then figuring out how to disassemble and then reassemble a compressed air piece of equipment that you may not be at all familiar with doing.
If you have a question about the air regulator, you can post it here at the compressed air regulator forum.