Immune responses to allografts represent a major barrier in organ transplantation. Immune tolerance to avoid chronic immunosuppression is a critical goal in the field, recently achieved in the clinic by combining bone marrow transplantation (BMT) with kidney transplantation following non-myeloablative conditioning. At high levels of chimerism such protocols can permit central deletional tolerance, but with a significant risk of graft-versus-host (GVH) disease (GVHD). By contrast, transient chimerism-based tolerance is devoid of GVHD risk and appears to initially depend on regulatory T cells (Tregs) followed by gradual, presumably peripheral, clonal deletion of donor-reactive T cells. Here we review recent mechanistic insights into tolerance and the development of more robust and safer protocols for tolerance induction that will be guided by innovative immune monitoring tools.