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T reatment with CD40Ig results in indefinite allograft survival in a complete MHC-mismatched heart allograft model in the rat. Here we show that serial second, third, and fourth adoptive transfers of total splenocytes from CD40Ig-treated recipients into secondary recipients led to indefinite donor-specific allograft acceptance. Purification of splenocyte subpopulations from CD40Ig-treated recipients demonstrated that only the adoptively transferred CD8⁺CD45RC^low subset resulted in donor-specific long-term survival, whereas CD8⁺CD45RC^low T cells from naive animals did not. Accepted grafts displayed increased indoleamine 2,3-dioxygenase (IDO) expression restricted in the graft to ECs. Coculture of donor ECs with CD8⁺CD45RC^low T cells purified from CD40Ig-treated animals resulted in donor-specific IDO expression dependent on IFN-γ. Neutralization of IFN-γ or IDO triggered acute allograft rejection in both CD40Ig-treated and adoptively transferred recipients. This study demonstrates for what we believe to be the first time that interference in CD40–CD40 ligand (CD40-CD40L) interactions induces allospecific CD8⁺ Tregs that maintain allograft survival. CD8⁺CD45RC^low T cells act through IFN-γ production, which in turn induces IDO expression by graft ECs. Thus, donor alloantigen-specific CD8⁺ Tregs may promote local graft immune privilege through IDO expression.