The liver is a preferred target organ for gene therapy not only for liver-specific diseases but also for disorders that require systemic delivery of a protein. Diseases that could benefit from hepatic gene transfer include hemophilia, metabolic disorders, lysosomal storage disorders, and others. For a successful delivery of the transgene and sustained expression, the protocol must avoid immune responses in order to be efficacious. A growing number of studies have demonstrated that liver-directed transfer can induce transgene product-specific immune tolerance. Tolerance obtained via this route requires optimal engineering of the vector to eliminate transgene expression in antigen presenting cells while restricting high levels of therapeutic expression to hepatocytes. Innate immune responses may prevent tolerance induction, cause toxicity, and have to be minimized. Discussed in our review is the crucial role of CD4+CD25+ regulatory T cells in tolerance to the hepatocyte-derived gene product, the immunobiology of the liver and our current understanding of its tolerogenic properties, current and proposed research as to the mechanisms behind the liver's unique cellular environment, as well as development of the tools for tolerance induction such as advanced vector systems.