Current immunosuppression protocols, although often effective, are nonspecific and therefore hazardous. Consequently, immunological tolerance that is antigen specific and does not globally depress the patient's immune system has become one of the Holy Grails of immunology. Since the discovery that cytokines have immunomodulatory effects, extensive research has investigated the potential of these molecules to induce and maintain specific immunological tolerance in the context of transplantation, allergy and autoimmunity. In this article, we review the possible mechanisms by which cytokines can modulate the immune response and the animal models that frequently confound the theory that a single cytokine, or group of cytokines, can induce tolerance in a predictable manner. Finally, we discuss the role of cytokines at a paracrine level, particularly in the context of inducing and maintaining antigen-specific, regulatory T cells with the clinical potential to suppress specific immune responses.