The liver exhibits a distinctive form of immune privilege, termed liver tolerance, in which orthotopic liver transplantation results in systemic donor-specific T-cell tolerance, while antigens introduced either into hepatocytes or via the portal vein also cause tolerance. Here we argue that the fundamental mechanism driving liver tolerance is likely to be the continuous exposure of diverse liver cell types to endotoxin, derived from the intestinal bacteria. This exposure promotes the expression of a set of cytokines, antigen-presenting molecules, and costimulatory signals that impose T-cell inactivation, partly via effects on liver antigen-presenting cells. The evidence favors clonal deletion mechanisms and is consistent with a role for regulatory T cells but does not support either anergy or immune deviation as important factors in liver tolerance.