Waterborne parasitic diseases plague tropical regions of the world with the development of water resources often increasing transmission. Skin-penetrating cercariae (infectious stages of schistosome parasites) mature within their mammalian host, form sexual pairs and produce several hundred eggs per day. Many eggs are swept within the circulation and in the case of Schistosoma mansoni and S. japonicum, become lodged within hepatic sinusoids, invoking a fibrotic granulomatous response. Animal studies have identified a moderate type 1 helper (Th1) response to parasite antigens; however, a robust Th2 response to egg-derived antigens dominates and propagates fibrogenesis within the liver. Elegant T helper cell polarization studies have highlighted that critical control of Th1, Th2 and interleukin (IL)-17-secreting lymphocytes is necessary to prevent severe liver pathology. Alternatively activated macrophages develop in the Th2 milieu and upregulate Fizz1, Ym-1 and Arg-1. The possible contribution of macrophages to fibrogenesis and their role in immune regulation are discussed. Within the liver, natural (CD4(+)CD25(+) Forkhead box protein 3 (Foxp3)(+)) and inducible (CD4(+)Foxp3(-)) Treg's are recruited, providing an essential regulatory arm to stabilize the immune response and limit immunopathology. This review ties together current thinking of how the granulomatous response develops, causing much of the associated immunopathology, with extensive discussions on how regulatory cells and cytokine decoy receptors serve to limit the extent of immune-mediated pathology during schistosomiasis.