We have previously demonstrated that bilirubin administration to the recipient induces tolerance towards islet cell transplants across a complete MHC mismatch in a mouse model. Here we assess the mechanisms of such protection. Bilirubin treatment of recipients improved function of islet allografts by suppressing expressions of proinflammatory and proapoptotic genes in those islets and by increasing Foxp3(+) T regulatory (Treg) cells at the site of transplanted islets at various days after transplantation. No prolongation of graft survival was observed in recipients treated with bilirubin when CD4(+)CD25(+) T cells were predepleted from those recipients, indicating that Treg cells are necessary for the protective effect of bilirubin. Adoptive transfer of Treg cells from tolerant mice into Rag1(-/-) recipients resulted in long-term acceptance of skin allografts in an alloantigen-specific manner, suggesting that Treg cells are sufficient to induce tolerance. In addition, bilirubin treatment promoted de novo generation of Treg cells in Rag1(-/-) recipients. Thus, bilirubin treatment to the recipients prolongs islet allograft survival via a Treg-dependent manner in which CD4(+)CD25(+) Treg cells are both necessary and sufficient for tolerance induction and graft acceptance. Bilirubin treatment promotes de novo generation of Treg cells that might account for the protective effects of bilirubin given to recipients.