In order to study the ability of costimulation blockade to induce tolerance to human embryonic stem cells (HESC), severe combined immunodeficient (SCID), and immunocompetent C57BL/6 mice treated with costimulation blockade received intratesticular and intramyocardial HESC transplants. All SCID mice with intratesticular HESC transplants developed teratoma. When SCID mice were transplanted intramyocardially, only two of five mice developed teratoma-like tumors. C57BL/6 mice transplanted intratesticularly and treated with costimulation blockade all developed teratoma and were surrounded by CD4(+)CD25(+)Foxp3(+) T-cells, while isotype control treated recipients rejected their grafts. Most C57BL/6 mice transplanted intramyocardially and treated with costimulation blockade demonstrated lymphocytic infiltrates 1 month after transplantation, whereas one maintained its graft. Isolation of regulatory T-cells from intramyocardial transplanted recipients treated with costimulation blockade demonstrated specificity toward undifferentiated HESC and down-regulated naive T-cell activation toward HESC. These results demonstrate that costimulation blockade is sufficiently robust to induce tolerance to HESC in the immune-privileged environment of the testis. HESC specific regulatory T-cells developed to HESC transplanted to the heart and the success of transplantation was similar to that seen in SCID mice.