Fingolimod (FTY720) is the first of a new immunomodulator class : sphingosine 1-phosphate (S1P) receptor modulator. We have found FTY720 by chemical modification of a natural product, myriocin derived from Isaria sinclairii, a kind of vegetative wasp. FTY720 has shown to be highly effective in experimental allograft models and autoimmune disease models. A most striking feature of FTY720 is the induction of a marked decrease in peripheral blood lymphocytes at doses that show immunomodulating effects in these models. It is revealed that the reduction of circulating lymphocytes by FTY720 is due to sequestration of lymphocytes into secondary lymphoid organs and thymus. FTY720 is rapidly converted to FTY720-phosphate (FTY720-P) by sphingosine kinases. FTY720-P acts as a potent agonist at S1P receptor type 1 (S1P(1)), internalizes S1P(1) on lymphocytes, and inhibits the migration of lymphocytes toward S1P. Thus, it is highly likely that immunomodulating effects of FTY720 are caused by inhibition of S1P/S1P(1)-dependent lymphocyte egress from secondary lymphoid organs and thymus. Since FTY720 possesses a novel mechanism of action and is reported to be highly effective in multiple sclerosis patients, it is presumed that FTY720 provides a new therapeutic approach for autoimmune diseases including multiple sclerosis.