We have previously shown that intranasal (i.n.) administration of a single MHC class II-restricted HY peptide to female mice induces tolerance to up to five additional epitopes expressed on test male grafts, a phenomenon known as linked suppression. In this study, we investigated the molecular mechanisms involved both in the induction phase following peptide administration and during linked suppression after grafting. We report that following initial i.n. administration, peptide is widely disseminated and is presented by functionally immature dendritic cells. These fail to cause optimal stimulation of the responding HY-specific CD4(+) T cells that express genes characteristic of regulatory T cells. Following i.n. peptide plus LPS administration, causing immunization, HY-specific CD4(+) T cells express genes characteristic of activated T cells. We further find that following male skin grafting, HY-specific CD8(+) T cells from peptide-treated tolerant mice display both quantitative and qualitative differences compared with similar cells from untreated mice that reject their grafts. In tolerant mice there are fewer HY-specific CD8(+) cells and they express several genes characteristic of exhausted T cells. Furthermore, associated with specific chemokine receptor and integrin expression, HY-specific CD8(+) T cells show more limited migration from the graft draining lymph node into other tissues.