Control of tryptophan metabolism by indoleamine 2,3‐dioxygenase (IDO) in dendritic cells (DCs) is a highly versatile regulator of innate and adaptive immune responses. In acute reactions, the otherwise inflammatory cytokine interferon γ (IFN‐γ) acts in a feedback fashion to induce IDO's enzymatic function — and thus prevent potentially harmful, exaggerated responses — through the combined effects of tryptophan starvation and tryptophan catabolites acting via the aryl hydrocarbon receptor of T cells. IDO, however, is also involved in the maintenance of stable tolerance to self in noninflammatory contexts, thus restraining autoimmunity. Exposure, indeed, of mouse plasmacytoid DCs (pDCs) to transforming growth factor β (TGF‐β) provides IDO with regulatory effects that are distinct, in nature, from its enzymic activity. Once phosphorylated, IDO mediates signaling events culminating in self‐amplification and maintenance of a stably regulatory condition in pDCs. Therefore, IDO has dual immunoregulatory functions driven by distinct cytokines. Firstly, the IFN‐γ–IDO axis is crucial in generating and sustaining the function of regulatory T cells. Secondly, a nonenzymic function of IDO — as a signaling molecule — contributes to TGF‐β–driven tolerance. The latter function is part of a regulatory circuit in pDCs whereby — in response to TGF‐β — the kinase Fyn mediates tyrosine phosphorylation of IDO‐associated immunoreceptor tyrosine‐based inhibitory motifs, resulting in downstream effects that regulate gene expression and preside over a proper, homeostatic balance between immunity and tolerance. All these aspects are covered in this review.