During graft-versus-host disease (GVHD), donor T cells become activated and migrate to tissue sites. Previously, we demonstrated a crucial role for the immunosuppressive enzyme indoleamine 2,3-dioxygenase (IDO) in GVHD regulation. Here, we show that upon arrival in the colon, activated donor T cells produced interferon-gamma that up-regulated IDO, causing T-cell anergy and apoptosis. IDO induces GCN2 kinase, up-regulating a T-cell stress response implicated in IDO immunosuppression. Donor T cells did not require GCN2 kinase to respond to IDO, suggesting toxic IDO metabolites, and not tryptophan depletion, were responsible for suppression. When exogenous metabolites were administered, GVHD lethality was reduced. To determine whether IDO could be induced before transplantation for enhanced GVHD suppression, we first determined whether antigen-presenting cells (APCs) or epithelial cells were primarily responsible for IDO expression and subsequent GVHD suppression. Recipients with wild-type versus IDO(-/-) APCs had increased survival, regardless of epithelial-cell expression of IDO, suggesting that APCs were suitable targets for inducing IDO. Administration of an agonist to toll-like receptor-7/8, a receptor expressed primarily on APCs, induced IDO and reduced injury in the colon and ameliorated lethality. We conclude that IDO up-regulation may have therapeutic potential for preventing GVHD in the clinic.