The enzyme indoleamine 2,3-dioxygenase (IDO) regulates immune responses through the capacity to degrade the essential amino acid tryptophan into kynurenine and other downstream metabolites that suppress effector T-cell function and favour the differentiation of regulatory T cells. Considerable experimental evidence indicates that IDO can be expressed by dendritic cells, by tumour cells or by surrounding stromal cells, either within proximity of the tumour or at distal sites. Recent advances in the biochemistry of IDO and in our understanding of the biological relevance of IDO-mediated tryptophan consumption to the establishment of dominant immune tolerance to cancer will be summarised and discussed. Within the wider context of cancer immunotherapy, this Review also delineates how IDO could be exploited as a molecular target for therapeutic intervention in order to boost anti-cancer immunity.