Small-molecule inhibitors of indoleamine 2,3-dioxygenase (IDO) are currently being translated to clinic for evaluation as cancer therapeutics. One issue related to trials of the clinical lead inhibitor, d-1-methyl-tryptophan (D-1MT), concerns the extent of its biochemical specificity for IDO. Here, we report the discovery of a novel IDO-related tryptophan catabolic enzyme termed IDO2 that is preferentially inhibited by D-1MT. IDO2 is not as widely expressed as IDO but like its relative is also expressed in antigen-presenting dendritic cells where tryptophan catabolism drives immune tolerance. We identified two common genetic polymorphisms in the human gene encoding IDO2 that ablate its enzymatic activity. Like IDO, IDO2 catabolizes tryptophan, triggers phosphorylation of the translation initiation factor eIF2α, and (reported here for the first time) mobilizes translation of LIP, an inhibitory isoform of the immune regulatory transcription factor NF-IL6. Tryptophan restoration switches off this signaling pathway when activated by IDO, but not IDO2, arguing that IDO2 has a distinct signaling role. Our findings have implications for understanding the evolution of tumoral immune tolerance and for interpreting preclinical and clinical responses to D-1MT or other IDO inhibitors being developed to treat cancer, chronic infection, and other diseases. [Cancer Res 2007;67(15):7082–7]