Liver transplantation (LT) is considered the gold standard of curative treatment for patients with end‐stage liver disease or nonresectable hepatic malignant tumors. Rejection after LT is the main nontechnical factor affecting the prognosis of recipients. Medical and surgical advances, combined with improved immunosuppression with drugs such as calcineurin inhibitors (CNIs), have contributed to an increase in 1‐year graft survival to around 80%. However, medium‐ and long‐term improvements in LT outcomes have lagged behind. Importantly, CNIs and other classical immunosuppressive drugs are associated with significant adverse effects, including malignancies, cardiovascular disease, and severe renal dysfunction. Immunomodulation using regulatory T cells (Tregs) is emerging as a promising alternative to classical immunosuppression. Since their discovery, the immunomodulatory effects of Tregs have been demonstrated in a range of diseases. This has rejuvenated the interest in using Tregs as a therapeutic strategy to induce immune tolerance after LT. In this review, we first summarize the discovery and development of Tregs. We then review the preclinical data supporting their production, mechanism of action, and therapeutic efficacy followed by a summary of relevant clinical trials. Finally, we discuss the outstanding challenges of Treg therapy and its future prospects for routine use in LT.