In recent years it has become apparent that the liver holds a distinct immunological position. Previously described as a "graveyard" for T cells activated in the periphery, emerging evidence indicates that this organ may have a more active role in mediating tolerance. Attenuated immune responses in the liver can be beneficial in the transplantation setting, as liver transplants are more readily accepted than other organ allografts even in the absence of immunosuppressive drugs. However, the ability of the liver to induce immunological unresponsiveness could be exploited by some pathogens, such as the hepatitis C virus (HCV), to establish chronic infections with potentially fatal outcomes. Understanding the mechanisms controlling the balance between intrahepatic tolerance and immunity is critical in order to design new strategies to enhance acceptance of solid organ allografts and to promote efficient immune responses against HCV. In this article, we will review current knowledge of the mechanisms regulating intrahepatic immunity and discuss how these mechanisms might potentially be targeted to achieve advantageous clinical outcomes in transplantation and persistent hepatotropic infections.