In liver transplantation, the development of tolerance is associated with an increased rate of apoptosis of T lymphocytes in the portal inflammatory infiltrate and the presence of an intragraft Th2-like T cell population. Underlying mechanisms are poorly understood. Kupffer cells (KC), which reside in the hepatic sinosoids, can directly interact with circulating T lymphocytes and thus are uniquely positioned to play a role in immunomodulation. In this study, the immunoregulatory effects of KC were investigated. We show that KC can significantly suppress T cell proliferation in mixed leukocyte reaction (MLR). Furthermore, KC express functional Fas ligand (FasL) and can induce apoptosis of Fas+ cells. This process can be blocked by addition of neutralizing anti-FasL antibody. Moreover, using an allogeneic liver transplant model we have determined that 1. KC recovered from chronically accepted hepatic allografts have increased FasL messenger RNA (mRNA) and protein expression and a greater ability to induce apoptosis of alloreactive T cells compared with KC recovered from an acute rejection model; 2. KC not only induce apoptosis of T cells, but also regulate cytokine production and Th2/Th3-like cytokine (interleukin [IL]-10 / transforming growth factor [TGF]-beta) mRNA expression in allogeneic MLR in vitro; and 3. administration of KC derived from chronically accepted liver allografts significantly prolongs the survival of hepatic allografts in an acute rejection model in an alloantigen-specific manner. In conclusion, these data implicate the possible role of KC-mediated regulation of T cell response in the induction of immune tolerance in liver allografts.