Disease tolerance is the ability of the host to reduce the effect of infection on host fitness. Analysis of disease tolerance pathways could provide new approaches for treating infections and other inflammatory diseases. Typically, an initial exposure to bacterial lipopolysaccharide (LPS) induces a state of refractoriness to further LPS challenge (endotoxin tolerance). We found that a first exposure of mice to LPS activated the ligand-operated transcription factor aryl hydrocarbon receptor (AhR) and the hepatic enzyme tryptophan 2,3-dioxygenase, which provided an activating ligand to the former, to downregulate early inflammatory gene expression. However, on LPS rechallenge, AhR engaged in long-term regulation of systemic inflammation only in the presence of indoleamine 2,3-dioxygenase 1 (IDO1). AhR-complex-associated Src kinase activity promoted IDO1 phosphorylation and signalling ability. The resulting endotoxin-tolerant state was found to protect mice against immunopathology in Gram-negative and Gram-positive infections, pointing to a role for AhR in contributing to host fitness. Initial exposure to lipopolysaccharide (LPS) induces endotoxin tolerance, which reduces immunological reactions to LPS; here it is shown that primary LPS challenge is controlled by AhR, TDO2 and IL-10, whereas sustained effects require AhR, IDO1 and TGF-β, allowing for disease tolerance with reduced immunopathology in infections. Endotoxin tolerance is an aspect of innate immunity in which prior exposure to a bacterial endotoxin (or lipopolysaccharide) reduces the host's response to subsequent exposure. Despite a recent resurgence of interest in this effect, the underlying mechanisms are poorly understood. This paper shows that the development of endotoxin tolerance is dependent on tryptophan catabolism through the sequential involvement of the metabolic enzymes indoleamine 2,3-dioxygenase 1 (IDO1) and tryptophan 2,3-dioxygenase (TDO2). This leads to kynurenine production which activates the aryl hydrocarbon receptor AhR. Primary endotoxin challenge is controlled by AhR, TDO2 and interleukin, whereas sustained tolerance requires AhR, IDO1 and the cytokine TGF-β, allowing for pathogen clearance with little immunopathology.