FTY720 is the first of a new immunomodulator class: sphingosine 1-phosphate (S1P) receptor agonist. In 1994, an immunosuppressive natural product, ISP-I (myriocin), was isolated from the culture broth of Isaria sinclairii, a type of vegetative wasp. The chemical modification of ISP-I yielded a new compound, FTY720, which has more potent immunosuppressive activity and less toxicity than ISP-I does. FTY720 has been shown to be highly effective in experimental allotransplantation models and autoimmune disease models. A striking feature of FTY720 is the induction of a marked decrease in peripheral blood T- and B-cells at doses that show immunosuppressive activity in these models. Reportedly, FTY720 is rapidly converted to FTY720-phosphate (FTY720-P) by sphingosine kinase 2 in vivo, and FTY720-P acts as a potent agonist at S1P receptors. Recently, it has been suggested that FTY720-P internalizes S1P1 on lymphocytes and thereby inhibits the migration of lymphocytes toward S1P. Thus, it is likely that the reduction of circulating lymphocytes by FTY720 is due to the inhibition of S1P/S1P1-dependent lymphocyte egress from secondary lymphoid tissues and thymus. Because FTY720 displays a novel mechanism of action that has not been observed with other immunosuppressive agents and shows a synergism with cyclosporin A (CsA) and tacrolimus, it is presumed that FTY720 provides a useful tool for the prevention of transplant rejection and a new therapeutic approach for autoimmune diseases including multiple sclerosis and rheumatoid arthritis.