Immune privilege was originally believed to be associated with particular organs, such as the testes, brain, the anterior chamber of the eye, and the placenta, which need to be protected from any excessive inflammatory activity. It is now becoming clear, however, that immune privilege can be acquired locally in many different tissues in response to inflammation, but particularly due to the action of regulatory T cells (Tregs) induced by the deliberate therapeutic manipulation of the immune system toward tolerance. In this review, we consider the interplay between Tregs, dendritic cells, and the graft itself and the resulting local protective mechanisms that are coordinated to maintain the tolerant state. We discuss how both anti-inflammatory cytokines and negative costimulatory interactions can elicit a number of interrelated mechanisms to regulate both T-cell and antigen-presenting cell activity, for example, by catabolism of the amino acids tryptophan and arginine and the induction of hemoxygenase and carbon monoxide. The induction of local immune privilege has implications for the design of therapeutic regimens and the monitoring of the tolerant status of patients being weaned off immunosuppression.