The predisposition of nonobese diabetic (NOD) mice to develop autoimmunity reflects deficiencies in both peripheral and central tolerance. Several defects have been described in these mice, among which aberrant antigen-presenting cell function and peroxynitrite formation. Prediabetes and diabetes in NOD mice have been targeted with different outcomes by a variety of immunotherapies, including interferon (IFN)-gamma. This cytokine may be instrumental in specific forms of tolerance by virtue of its ability to activate immunosuppressive tryptophan catabolism. Here, we provide evidence that IFN-gamma fails to induce tolerizing properties in dendritic cells from highly susceptible female mice early in prediabetes. This effect is associated with impaired tryptophan catabolism, is related to transient blockade of the Stat1 pathway of intracellular signaling by IFN-gamma, and is caused by peroxynitrite production. However, the use of a peroxynitrite inhibitor can rescue tryptophan catabolism and tolerance in those mice. This is the first report of an experimental autoimmune disease in which defective tolerance is causally linked to impaired tryptophan catabolism.