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The ability of the immune system to distinguish between harmful and harmless antigens is essential for mounting protective immune responses and preventing the induction of pathology. Tolerance is a mechanism that prevents or suppresses potentially injurious immune responses. Natural killer T (NKT) lymphocytes, a subset of regulatory T lymphocytes, can induce pro-inflammatory or anti-inflammatory immune responses. This subset of cells appears to be crucial for induction of tolerance by several immune-modulatory interventions; these include immune manipulations in the setting of transplantation, induction of tolerance by introduction of antigen into immune-privileged sites, and oral administration of disease-associated-antigen. The ability to predict whether tolerance or immunity will be generated in a given situation is essential for development of NKT lymphocyte-based immune-modulatory treatments. The role of NKT lymphocytes in these settings, and the requirements for development of tolerance, rather than immunity, are discussed.