The Th1-type cytokine interferon-γ (IFN-γ ) is known as one of the most versatile players of the immune system. In transplantation immunology IFN-γ has been shown to have contradictory effects on allograft survival via effects on both, the immune system and on the graft itself. The immunomodulatory enzyme indoleamine 2,3-dioxygenase (IDO), widely distributed in mammals, is induced preferentially by IFN-γ . IDO degrades the essential amino acid tryptophan to form N-formyl kynurenine which is subsequently converted to niacin. Recently, it has been proposed that IFN-γ-mediated activation of IDO is critically involved in the regulation of immune responses, to establish immune-tolerance in pregnant mice upon their fetuses, or to induce T-cell unresponsiveness. Proliferation of alloreactive Tcells is thereby arrested via local tryptophan deprivation and the accumulation of toxic tryptophan catabolites. Despite growing recognition of the molecular T-cell regulatory mechanisms, the physiologic role of IDO in solid organ transplantation, however, remains unclear. Available experimental data indicate that IDO is involved in the mechanism of spontaneous donor-specific tolerance of liver grafts, and that genetic manipulation by introduction of the IDO gene into allografts is associated with prolonged survival. Furthermore, antigenpresenting cells, such as dendritic cells, can increase their expression of IDO, thus regulating immune responses. Based on these findings, the concept that cells expressing IDO can inhibit T-cell responses and hence induce tolerance has emerged as a new paradigm in immunology. Here we review the current literature on IDO in the context of transplantation and outline its potential implication as a target for tolerance induction.