Interferons have been shown to be potential anti-cancer agents and to inhibit tumor cell growth in culture. The in vivo mechanism of the anti-proliferative effect may be direct or indirect through the immune system; however, in vitro a primary mechanism of cytotoxicity is through the depletion of tryptophan. In particular, interferon-gamma (IFN-gamma) induces an enzyme of tryptophan catabolism, indoleamine 2,3-dioxygenase (IDO), which is responsible for conversion of tryptophan and other indole derivatives to kynurenine. The inhibitory effect of interferon on many intracellular parasites such as Toxoplasma gondii and Chlamydia trachomatis is by the same mechanism. Elevated kynurenine levels have been found in humans in a number of diseases and after interferon treatment, and the enzyme is induced in rodents after administration of interferon inducers, or influenza virus. IDO induction also occurs in vivo during rejection of allogeneic tumors, indicating a possible role for this enzyme in the tumor rejection process. The gene for IDO has been cloned and shown to be differentially regulated by IFN-alpha and IFN-gamma. IDO induction has been correlated with induction of GTP-cyclohydrolase, the key enzyme in pteridine biosynthesis. A direct role for IDO in pteridine synthesis has not been shown, and this parallel induction may reflect coordinate regulation of genes induced by IFN-gamma. A possible role for IDO in O2-radical scavenging and in inflammation is discussed.