Indoleamine 2,3-dioxygenase (IDO) is an interferon-gamma-inducible intracellular enzyme which catalyses the catabolism of tryptophan. The effects of its activity are tryptophan deficiency, excess tryptophan breakdown products (kynurenines) and consumption of reactive oxygen species. Tryptophan deficiency and kynurenine excess have immunodulatory effects including suppressing lymphocyte responses particularly by sensitizing them to apoptosis, which is of interest in many fields of research, particularly transplantation. In several transplant models, increased IDO activity in transplanted cells has been demonstrated to have antirejection properties both in vitro and in vivo. Recently, CTLA4, whether membrane bound or in the form of the costimulation blocking agent, CTLA4Ig, was determined to have much of its effect via increased IDO activity in dendritic cells. This finding, coupled with the capacity of IDO competent dendritic cells to induce T-regulatory cells through high levels of IDO activity, suggest a possible peripheral tolerogenic pathway with important implications for transplantation. Many other areas of transplantation in which IDO activity may be of benefit remain unexplored. In concert with experiments examining increased IDO activity for prolonged graft survival, studies continue to better define the pathophysiologic role of IDO. Understanding more clearly the implications of IDO activity on different cell types is allowing a more focused approach to determining if IDO has a role in generating transplantation tolerance.