Fibrinogen-like protein 2 (FGL2) is an immunomodulatory protein that is expressed by regulatory T cells (Tregs). The objective of this study was to determine if recombinant FGL2 (rFGL2) treatment or constitutive FGL2 overexpression could promote transplant tolerance in mice. Although rFGL2 treatment prevented rejection of fully mismatched cardiac allografts, all grafts were rejected after stopping treatment. Next, we generated FGL2 transgenic mice (fgl2Tg) that ubiquitously overexpressed FGL2. These mice developed normally and had no evidence of the autoimmune glomerulonephritis seen in fgl2−/− mice. Immune characterization showed fgl2Tg T cells were hypoproliferative to stimulation with alloantigens or anti-CD3 and anti-CD28 stimulation, and fgl2Tg Tregs had increased immunosuppressive activity compared with fgl2+/+ Tregs. To determine if FGL2 overexpression can promote tolerance, we transplanted fully mismatched cardiac allografts into fgl2Tg recipients. Fifty percent of cardiac grafts were accepted indefinitely in fgl2Tg recipients without any immunosuppression. Tolerant fgl2Tg grafts had increased numbers and proportions of Tregs and tolerant fgl2Tg mice had reduced proliferation to donor but not third party antigens. These data show that tolerance in fgl2Tg recipients involves changes in Treg and T cell activity that contribute to a higher intragraft Treg–to–T cell ratio and acceptance of fully mismatched allografts.