Allograft(dagger) transplant outcome, rejection or tolerance, depends upon striking a balance between the pertinent cytopathic and regulatory T cells. The drug cyclosporine is a widely used immunosuppressive agent among transplant recipients. Previous studies have demonstrated that cyclosporine blocks apoptosis of activated T cells and the ability of costimulation blockade based regimens to create peripheral transplant tolerance. We now test the hypothesis that the mechanism by which cyclosporine blocks tolerance induction is IL-2 dependent, and linked to a detrimental effect upon T(reg) function. Our study demonstrates that cyclosporine blocks IL-2 gene expression and activation induced cell death (AICD) of alloreactive T effector cells. We also show that cyclosporine abolishes the beneficial effects of a donor specific transfusion (DST) plus anti-CD154 monoclonal antibody (alpha CD154) regimen on enhanced T(regs) function and allograft tolerance induction. Interestingly, provision of IL-2/Fc, a long-lived form of IL-2, completely reverses the detrimental effects of this adjunctive cyclosporine treatment on AICD of alloreactive T effectors, T(regs) function and tolerance induction. Furthermore, in a MHC mismatched islet allograft model, the combination of cyclosporine with IL-2/Fc permitted long-term allograft survival and induced alloantigen specific allograft tolerance. The combination of IL-2/Fc and cyclosporine treatment may provide a new clinical strategy to promote transplant tolerance.