Objective To determine whether mesenchymal stem cells（MSCs）can induce the establishment of kidney allograft tolerance，as well as indoleamine 2，3-dioxygenase（IDO）contributes to the immunoregulatory functions of MSCs in that process. Methods MSCs（1×106）from wild-type（wt-MSCs）or IDO-knockout （IDO-/--MSCs）C57BL/6 mice were injected intravenously into BALB/c recipients 24 hours after receiving a life-supporting orthotopic C57BL/6 renal graft. Recipients treated with either wt-MSCs or IDO-/--MSCs were used as two study groups（n＝6/group）. In addition，6 native BALB/c mice were used as controls. Samples were collected at endpoint of graft rejection or on postoperative day（POD）100. Long-term surviving BALB/c kidney allograft recipients received full-thickness skin grafts（1 cm×1 cm）from C57BL/6 donor and C3H mouse strains on POD100 and were monitored daily. The graft pathology，immunohistochemistry，flow cytometry，mixed lymphocyte reaction were used for detecting graft rejection，intragraft Foxp3+ cell infiltration，donor-reactive antibody and cellular phenotypic expression，dendritic cell（DC）and T cell function，respectively. Results wt-MSC-treated recipients achieved allograft tolerance with normal histology and undetectable antidonor antibody levels. Tolerant recipients demonstrated significantly high frequencies of tolerogenic dendritic cells（Tol-DCs）. In addition，high frequencies of CD4+CD25+Foxp3+ regulatory T-cells（Tregs）were found in recipient spleens and donor grafts，implying the important role of Tregs in the MSC-induced tolerance. Interestingly，renal allograft recipients treated with IDO-/--MSCs， were unable to achieve allograft tolerance，suggesting that functional IDO was necessary for the immunosuppression observed with wt-MSC treatment. Conclusion IDO secreted by MSCs was responsible for induction of kidney allograft tolerance through generation of Tregs. This study supports the clinical application of MSCs in transplantation