Indoleamine 2, 3-dioxygenase (IDO) catalyzes the initial and rate-limiting step in the degradation pathway of the essential amino acid tryptophan and is expressed by professional antigen presenting cells (APCs), epithelial cells, vascular endothelium and tumor cells. IDO-mediated catabolic products, which are additionally termed ‘kynurenines’, exerts important immunosuppressive functions primarily via regulating T effector cell anergy and inducing the proliferation of T regulatory cells. This endogenous tolerogenic pathway has a critical effect on mediating the magnitude of immune responses under various stress conditions, including tumor, infection and transplantation. The present review evaluates the recent progress in elucidating how catabolism of tryptophan regulated by IDO modulates the immune response to inflammatory and immunological signals. Blocking this pathway may be a novel adjuvant therapeutic strategy for clinical application in immunotherapy.