Beyond its effects on bone metabolism, calcium and phosphorus homeostasis, 1,25- dihydroxyvitamin D3 (1,25(OH)2D3, calcitriol) exerts profound effects on the immune system. We here provide an overview over the metabolism, molecular and cellular action of 1,25(OH)2D3 with particular regard to its immunomodulatory function. Effects of 1,25(OH)2D3 on the immune system are manyfold and include suppression of T cell activation, shaping of cytokine secretion patterns, induction of regulatory T cells, modulation of proliferation, and interference with apoptosis. 1,25(OH)2D3 further influences maturation, differentiation, and migration of antigen presenting cells. Altogether, its immunomodulatory potency is comparable to other established immunosuppressants without sharing their typical adverse effects. This profile makes 1,25(OH)2D3 a potential drug for the treatment of immune-mediated diseases. Yet, the major obstacle for its clinical use, its potent calcemic activity, is not overcome to date. The identification or generation of novel vitamin D derivatives with dissociated calcemic and immunomodulatory properties is therefore a major task. Its success might eventually lead to promising drugs for future therapeutic exploitation of a wide array of immune diseases, such as psoriasis, multiple sclerosis, rheumatoid arthritis, systemic lupus erythematosus, and others.