Presentation of graft-derived antigens with correct co-stimulation drives the allo-immune response. Without these factors graft-specific tolerance may result. For DC’s, the A20 gene is an antigen-presentation attenuator; increased A20 levels negatively regulate DC maturation. We examined whether A20’s inhibitory capacity could be harnessed to promote graft-specific tolerance. BALB/c(H-2d) islets were transplanted under the renal capsule of MHC-mismatched diabetic C57BL/6(H-2b) recipients. A20 was over-expressed using a rAd.A20 construct. Control grafts (n>10) were rapidly rejected, whereas ~45% (n>27) of A20-expressing grafts were permanently accepted (POD>200). RTqPCR analysis at POD10 revealed that A20-transduced grafts exhibited reduced mRNA levels of CXCL10, IFNγ, IL6 and IL17, but increased levels for IL10, CTLA4 and TGFβ. In-vitro experiments demonstrated that A20 suppressed cytokine-induced NF-κB and JNK/AP1 activation. A20s inhibitory action on JNK activation preserved metabolic function via pERK and FOXO1 signaling. Conversely, introducing a point-mutation into the OTU domain of A20 results in deregulated NF-κB and JNK/AP1 activation, leading to the increased expression of inflammatory factors, as well as a loss of first-phase insulin response under stress. Consequently, A20 mutant islet grafts exhibited a significantly faster rejection tempo compared to control grafts. Long-term surviving A20-transduced grafts exhibited Foxp3+ cells at the islet/kidney parenchyma border. To assess the importance of these cells, purified T-cells were adoptively transferred into immune-deficient RAG-/- mice pre-transplanted with either a BALB/c or third-party CBA(H-2k) allograft. ~70% of BALB/c grafts were accepted, whereas, all third-party grafts were rejected. Next, effector T-cells (CD25-depleted) were adoptively transferred. Consequently, all grafts were rejected. Thus A20-expression induced graft-specific tolerance, dependent upon CD25+T-cells. To determine if CD25+T-cells were necessary early, recipients were administered mAb-PC61 prior to transplantation of A20-overexpressing BALB/c islet grafts. In this case all A20-transduced grafts were rejected. Therefore, A20 re-programmed intra-graft inflammatory circuits, generating a local milieu supporting graft function and T-reg mediated tolerance.