Dendritic cells (DCs) play a key role in the activation and regulation of B and T lymphocytes. Production of indoleamine 2, 3-dioxygenase (IDO) by macrophages has recently been described to result in inhibition of T cell proliferation through tryptophan degradation. Since DCs can be derived from monocytes, we sought to determine whether DCs could produce IDO which could potentially regulate T cell proliferation. Northern blot analysis of RNA from cultured monocyte-derived human DC revealed that IDO mRNA was induced upon activation with CD40 ligand and IFN-γ. IDO produced from activated DCs was functionally active and capable of metabolizing tryptophan to kynurenine. Activated T cells were also capable of inducing IDO production by DCs, which was inhibited by a neutralizing Ab against IFN-γ. DC production of IDO resulted in inhibition of T cell proliferation, which could be prevented using the IDO inhibitor 1-methyl-dl-tryptophan. These results suggest that activation of DCs induces the production of functional IDO, which causes depletion of tryptophan and subsequent inhibition of T cell proliferation. This may represent a potential mechanism for DCs to regulate the immune response.