Dendritic cells (DCs) are uniquely well‐equipped antigen‐presenting cells (APCs) regarded classically as sentinels of the immune response, which induce and regulate T‐cell reactivity. They play critical roles in central tolerance and in the maintenance of peripheral tolerance in the normal steady state. Following cell or organ transplantation, DCs present antigen to T cells via the direct or indirect pathways of allorecognition. These functions of DCs set in train the rejection response, but they also serve as potential targets for suppression of alloimmune reactivity and promotion of tolerance induction. Much evidence from various model systems now indicates that DCs can induce specific T‐cell tolerance. Although underlying mechanisms have not been fully elucidated, the capacity to induce T‐regulatory cells may be an important property of tolerogenic or regulatory DCs. Efforts to generate ‘designer’ DCs with tolerogenic properties in the laboratory using specific cytokines, immunologic or pharmacologic reagents, or genetic engineering approaches have already met with some success. Alternatively, targeting of DCs in vivo (e.g. by infusion of apoptotic allogeneic cells) to take advantage of their inherent tolerogenicity has also demonstrated exciting potential. The remarkable heterogeneity and plasticity of these important APCs present additional challenges to optimizing DC‐based therapies that may lead to improved tolerance‐enhancing strategies in the clinic.