The tryptophan (trp)‐catabolizing enzyme indolamine 2,3‐dioxygenase (IDO) is induced by the T helper 1 (Th 1) cytokine IFN‐γ during infections in various tissues including the brain. Recent studies demonstrated an immune modulatory function of this enzyme, since IDO‐mediated depletion of trp hinders T cell proliferation, while its inhibition by 1‐methyl‐tryptophan (1‐Mt) induces breakdown of immune tolerance in the placenta, leading to rejection of allogeneic concepti. Here, we tested IDO expression and function during experimental autoimmune encephalomyelitis (EAE) actively induced in adult SJL mice by immunization with PLP_139–151. IDO activity (determined by HPLC analysis of the kynurenine/tryptophan ratio) was increased in the spleen during the preclinical phase, and within the brain and spinal cord at the onset of symptoms. Immunocytochemistry revealed macrophages/activated microglia expressing IDO during EAE and in vitro experiments confirmed IDO induction in microglia upon IFN‐γ treatment with synergistic effects of TNF‐α. Inhibition of IDO by systemic administration of 1‐Mt at clinical onset significantly exacerbated disease scores. From these data, it is tempting to speculate that IFN‐γ from encephalitogenic Th 1 cells induces local IDO expression, thereby initiating a negative feedback loop which may underlie the self‐limitation of autoimmune inflammation during EAE and multiple sclerosis.