Accumulating evidence that dendritic cells (DC) are important regulators of peripheral immune tolerance has led to the concept that donor-derived DC may be useful for inducing donor-specific transplantation tolerance. Although in vitro studies in this field have been encouraging, in vivo results have been inconsistent. Recent evidence has suggested a critical role of lymphoid organs in tolerance induction. In this study, we use a novel gene transduction technique to show that engineered expression of CCR7 on immature DC can markedly increase DC homing to lymphoid organs, leading to increased interaction with Ag-specific T cells. Moreover, we show that a single infusion of DC coexpressing CCR7 and the immunomodulatory molecule viral IL-10 (vIL-10) markedly prolongs cardiac allograft survival (mean survival time >100 days); importantly, DC expressing either vIL-10 alone or CCR7 alone was not effective. These results demonstrate an important paradigm for immune modulation using DC.