Carbon monoxide (CO) exposure of an islet donor frequently leads to islet allograft long-term survival and tolerance in recipients. We show here that CO confers its protective effects at least in part by suppressing Toll-like receptor 4 (TLR4) up-regulation in pancreatic beta cells. TLR4 is normally up-regulated in islets during the isolation procedure; donor treatment with CO suppresses TLR4 expression in isolated islets as well as in transplanted grafts. TLR4 up-regulation allows initiation of inflammation, which leads to islet allograft rejection; islet grafts from TLR4-deficient mice survive indefinitely in BALB/c recipients and show significantly less inflammation at various days after transplantation compared with grafts from a control donor. Isolated islets preinfected with a TLR4 dominant negative virus before transplantation demonstrated prolonged survival in recipients. Despite the salutary effects of TLR4 suppression, HO-1 expression is still needed in the recipient for islet survival: TLR4-deficient islets were rejected promptly after being transplanted into recipients in which HO-1 activity was blocked. In addition, incubation of an insulinoma cell line, betaTC3, with an anti-TLR4 antibody protects those cells from cytokine-induced apoptosis. Our data suggest that TLR4 induction in beta cells is involved in beta cell death and graft rejection after transplantation. CO exposure protects islets from rejection by blocking TLR4 up-regulation.