Chronic infection of anogenital epithelium with human papillomavirus (HPV) promotes development of cancer. Many pathogens evoke immunosuppressive mechanisms to enable persistent infection. We have previously shown that grafted skin expressing HPV16 E7 oncoprotein from a keratin-14 promoter (K14E7) is not rejected by a syngeneic, immunocompetent host. In this study we show that indoleamine 2,3-dioxygenase (IDO) 1, an IFN-γ-inducible immunoregulatory molecule, is more highly expressed by langerin -ve dermal dendritic cells (DCs) from K14E7 skin than nontransgenic control skin. Furthermore, inhibiting IDO activity using 1-methyl-dl-tryptophan (1-D/L-MT) promotes K14E7 skin graft rejection. Increased IDO1 expression and activity in K14E7 skin requires IFN-γ and invariant natural killer T (iNKT) cells, both of which have been shown to negatively regulate T-cell effector function and suppress K14E7 graft rejection. Furthermore, DCs from K14E7 skin express higher levels of IFN-γ receptor (IFN-γR) than DCs from control skin. K14E7 transgenic skin recruits significantly higher numbers of DCs, independent of IFN-γ and IFN-γR expression. Consistent with these observations in a murine model, we found higher expression of IDO1 and IFN-γ but not IDO2 in the cervical epithelium of patients with HPV-associated cervical intraepithelial neoplasia (CIN) 2/3. Our data support a hypothesis that induction of IDO1 in HPV-infected skin contributes to evasion of host immunity.