We have recently shown that expression of the enzyme indoleamine 2,3-dioxygenase (IDO) during murine pregnancy is required to prevent rejection of the allogeneic fetus by maternal T cells. In addition to their role in pregnancy, IDO-expressing cells are widely distributed in primary and secondary lymphoid organs. Here we show that monocytes that have differentiated under the influence of macrophage colony-stimulating factor acquire the ability to suppress T cell proliferation in vitro via rapid and selective degradation of tryptophan by IDO. IDO was induced in macrophages by a synergistic combination of the T cell–derived signals IFN-γ and CD40-ligand. Inhibition of IDO with the 1-methyl analogue of tryptophan prevented macrophage-mediated suppression. Purified T cells activated under tryptophan-deficient conditions were able to synthesize protein, enter the cell cycle, and progress normally through the initial stages of G1, including upregulation of IL-2 receptor and synthesis of IL-2. However, in the absence of tryptophan, cell cycle progression halted at a mid-G1 arrest point. Restoration of tryptophan to arrested cells was not sufficient to allow further cell cycle progression nor was costimulation via CD28. T cells could exit the arrested state only if a second round of T cell receptor signaling was provided in the presence of tryptophan. These data reveal a novel mechanism by which antigen-presenting cells can regulate T cell activation via tryptophan catabolism. We speculate that expression of IDO by certain antigen presenting cells in vivo allows them to suppress unwanted T cell responses.