Thymosin alpha1 (Talpha1), a naturally occurring thymic peptide, primes dendritic cells (DCs) for antifungal T-helper type 1 resistance through Toll-like receptor 9 (TLR9) signaling. As TLR9 signaling also activates the immuno-suppressive pathway of tryptophan catabolism via indoleamine 2,3-dioxygenase (IDO), we examined Talpha1 for possible induction of DC-dependent regulatory effects. Talpha1 affected T-helper cell priming and tolerance induction by human and murine DCs and induced IDO expression and function in the latter cells. IDO activation by Talpha1 required TLR9 and type I interferon receptor signaling and resulted in interleukin-10 production and generation of regulatory T cells. In transfer experiments, functionally distinct subsets of differentiated DCs were required for priming and tolerance to a fungal pathogen or alloantigens. In contrast, Talpha1-primed DCs fulfilled multiple requirements, including the induction of T-helper type 1 immunity within a regulatory environment. Thus, instructive immunotherapy with Talpha1 targeting IDO-competent DCs could allow for a balanced control of inflammation and tolerance.