Biliverdin, a product of heme oxygenase-1 (HO-1) enzymatic action, is converted into bilirubin, which has been considered a waste product in the past. We now show that administration of biliverdin has a salutary effect in organ transplantation. A brief course of treatment with biliverdin leads to long-term survival of H-2 incompatible heart allografts. Furthermore, those recipients harboring long-surviving (>100 days) allografts were tolerant to donor antigens indicated by the acceptance of second donor strain hearts but not third-party grafts. Treatment with biliverdin decreased intragraft leukocyte infiltration and inhibited T cell proliferation. Likely related to tolerance induction, biliverdin interferes with T cell signaling by inhibiting activation of nuclear factor of activated T cells (NFAT) and nuclear factor kappaB (NF-kappaB), two transcription factors involved in interleukin-2 (IL-2) transcription and T cell proliferation, as well as suppressing Th1 interferon-gamma (IFN-gamma) production in vitro. These findings support the potential use of biliverdin, a natural product, in transplantation and other T cell mediated immune disorders.