The inability of the host immune system to control tumor growth appears to result from dominant mechanisms of immune suppression that prevent the immune system from effectively responding in a way that consistently results in tumor rejection. Among the many possible mediators of tumoral immune escape, the immunoregulatory enzyme, indoleamine 2,3-dioxygenase (IDO), has recently gained considerable attention. IDO is a heme-containing, monomeric oxidoreductase that catalyzes the first and rate-limiting step in the degradation of the essential amino acid tryptophan to N-formyl-kynurenine. Tryptophan depletion as well as the accumulation of its metabolites results in a strongly inhibitory effect on the development of immune responses by blocking T cell activation, inducing T cell apoptosis and promoting the differentiation of naïve T cells into cells with a regulatory phenotype (Tregs). Recent data obtained from preclinical tumor models demonstrate that IDO inhibition can significantly enhance the antitumor activity of various chemotherapeutic and immunotherapeutic agents. These results, coupled with data showing that increased IDO expression is an independent prognostic variable for reduced overall survival in cancer patients, suggest that IDO inhibition may represent an effective strategy to treat malignancies, either alone or in combination with chemotherapeutics or other immune based therapies. This review will focus on the role of IDO as a mediator of peripheral immune tolerance, evidence that IDO becomes dysregulated in human cancers, and the latest progress on the development of IDO inhibitors as a novel anti-cancer therapy.