Dendritic cells are among the most potent antigen-presenting cells and are important in the development of both immunity and tolerance. Tolerogenic dendritic cell (Tol-DC) is a key factor in the induction and maintenance of tolerance during transplantation. However, the precise mechanism and direct evidence of in vivo immune modulation remain unclear. In the present study, we identified critical roles of immune modulation on transplant tolerance through interactions between Tol-DCs and regulatory T (Treg) cells. Tol-DCs remained in an immature state and were insensitive to maturation stimuli. Tol-DCs in tolerant recipients heightened the expression of indoleamine 2,3-dioxygenase (IDO) that induced allogeneic T-cell apoptosis. Adoptive transfer of Tol-DCs isolated from primary tolerant recipients resulted in augmentation of CD4(+)CD25(+)CTLA4(+) Treg cells and prolonged graft survival in secondary allogeneic heart transplantation and synergized with Treg cells to induce tolerance in secondary recipients. This study indicates that Tol-DC offers two functions during the process of tolerogenesis: suppression of anti-donor T-cell responses through production of IDO and interaction with Treg cells, which provides a framework for future research into tolerance induction.