The expression of HLA-G at the fetal-maternal interface during pregnancy and in transplanted tissue makes this a key molecule in the acceptance of a semiallogeneic fetus and allogeneic transplant. Dendritic cells (DC) play a critical role in the control of innate and adaptive immune responses. DC are present in maternal decidua, but must be kept under tight control. Here we describe the mechanism of tolerization of DC by HLA-G through inhibitory receptor interactions. The HLA-G-ILT (immunoglobulin-like transcript) interaction leads to development of tolerogenic DC with the induction of anergic and immunosuppressive T cells. Using human monocyte-derived DC and ILT4-transgenic mice, we show that (i) HLA-G induces the development of tolerogenic DC with arrest maturation/activation of myeloid DC, (ii) HLA-G-modified DC induce differentiation of anergic and immunosuppressive CD4+ and CD8+ effector T cells, and (iii) the gene expression profile provides evidence that HLA-G induces tolerogenic DC by disruption of the MHC class II presentation pathway. Ligation of ILT4 receptor on DC from transgenic mice diminished peptide presentation by MHC class II molecules and significantly prolonged allograft survival. These findings provide support that HLA-G is an important tolerogenic molecule on DC for the acceptance of a semiallogeneic fetus and transplanted tissue/organ.