The gastrointestinal (GI) tract microbiota is required for optimal digestion of foods, for the development of resistance against pathogens (termed colonization resistance), for the development of mucosa-associated lymphoid tissue, and for local as well as systemic immune homeostasis. Certain constituents of the GI tract microbiota are widely recognized as critical regulators and modulators of their host's immune response. These include bacterial members of the microbiota as well as parasitic nematodes. Immune regulation by immunomodulatory members of the GI microbiota primarily serves to subvert host antimicrobial immune defenses and promote persistent colonization, but as a side effect may prevent or suppress immunological disorders resulting from inappropriate responses to harmless antigens, such as allergy, colitis or autoimmunity. Many of the best understood GI-resident immunomodulatory species have co-evolved with their mammalian hosts for tens of thousands of years and masterfully manipulate host immune responses. In this review, we discuss the epidemiological evidence for the role of the GI tract microbiota as a whole, and of specific members, in protection against allergic and other immunological disorders. We then focus on the mechanistic basis of microbial immunomodulation, which is presented using several well-understood paradigmatic examples, that is, helminths, Helicobacter pylori, Bifidobacteria and Lactobacilli. In a final chapter, we highlight past and ongoing attempts at harnessing the immunomodulatory properties of GI microbiota species and their secreted products for intervention studies and describe the promises and limitations of these experimental approaches. The effects of pro- and prebiotics, bacterial lysates, as well as of fecal microbiota transplantation are presented and compared.