Indoleamine 2,3-dioxygenase (IDO) is a cytosolic hemoprotein enzyme responsible for the rate-limiting step in catabolism of tryptophan to N-formylkynurenine. The importance of this immunomodulatory protein in mammalian pregnancy was first described in 1998 by Munn et al. They showed that in contrary to transplantation rules, the fetus that carries both maternal and paternal genes is protected in mother’s immune system during gestation due to high levels of IDO expression in placenta. Since then, IDO has also been shown to have important roles in immunoregulation of cancer, inflammation and allergy, autoimmune diseases, and allotransplantation. Two main mechanisms have been suggested to be responsible for IDO immunosuppressive effects: either local tryptophan starvation, formation of toxic catabolites or both resulted from IDO activity, which both affect T cell-mediated immune response. In this article, we will discuss the biological characteristics of IDO along with its immunomodulatory functions in physiological and pathological conditions.