Best characterized as initiators of immunity, dendritic cells (DCs) also play an integral role in immune modulation. Immature DCs, for example, process self-antigens to induce and maintain tolerance. The immunoregulatory effects of DCs, however, are not limited to immature subtypes. Immunogenic mature DCs can also induce T regs to curb immune responses. We have found that human monocyte-derived DCs (moDCs) upregulate the immunomodulatory enzyme indoleamine 2,3-dioxygenase (IDO) with maturation and expand functionally active, naturally occurring as well as inducible regulatory T cells (T regs) in an IDO-dependent manner. Priming of resting bulk T cells with autologous, IDO-expressing, mature moDCs in the absence of exogenous cytokines results in up to 10-fold expansion of CD4+CD25hiFoxp3+CD127neg T cells that mediate significant dose-dependent suppression of both allogeneic and autologous T cells stimulated de novo by DCs. The expansion of T regs by IDO-expressing moDCs involves cell-to-cell contact, CD80/CD86 ligation, and IL-2. Autologous priming in the presence of a competitive inhibitor of IDO, 1-methyl-tryptophan, diminishes T reg expansion. Candidate T regs were further characterized after cytofluorographic sorting primed bulk T cells into CD4+CD25hi, CD4+CD25int, and CD4+CD25neg subpopulations. Post-sort analysis showed that >60% of the CD4+CD25hi cells coexpressed Foxp3, which was not present in the CD4+CD25neg cells. CD4+CD25hi T regs exerted dose-dependent inhibition of DC-stimulated allogeneic T cell proliferation, with >90% inhibition at a suppressor to responder T cell ratio of 1:1 and ~50% inhibition at a ratio of 1:25. CD4+CD25int cells produced intermediate suppression depending on dose, and CD4+CD25neg cells were not inhibitory. CD4+CD25hi T regs mediated similar suppression of autologous T cell responses to stimulation de novo by DCs. CD4+CD25hi T regs also inhibited the generation of cytotoxic T lymphocytes (CTLs) specific for the Wilms' tumor gene product (WT-1). The addition of CD4+CD25hi T regs to CTL-priming cultures resulted in a >80% decrease in specific target cell lysis of a WT-1-expressing cell line. Separate studies showed that T reg-mediated suppression is contact dependent and also requires TGF-beta, suggesting inhibition by naturally occurring and inducible T regs, respectively. Depletion of CD4+CD25hi T cells from bulk T cells by negative immunoselection with anti-CD25 magnetic beads at the outset of autologous priming significantly blunts T reg expansion, indicating a requirement for pre-existing T regs in the bulk T cell population. T reg expansion also occurs in priming cultures using cytofluorographically-sorted CD4+CD25neg T cells, indicating de novo generation of T regs from CD4+CD25neg precursors. In summary, our results demonstrate a mechanism by which mature, IDO-expressing, human moDCs expand autologous, naturally occurring as well as inducible T regs that functionally suppress the proliferation of both autologous and allogeneic T cells. Inhibition of this counter-regulatory pathway should result in more sustained benefit from active DC-based immunotherapy.