Background Ursodeoxycholic acid (UDCA) is the only known beneficial bile acid with immunomodulatory properties. Ursodeoxycholic acid prevents eosinophilic degranulation and reduces eosinophil counts in primary biliary cirrhosis. It is unknown whether UDCA would also modulate eosinophilic inflammation outside the gastrointestinal (GI) tract, such as eosinophilic airway inflammation seen in asthma. The working mechanism for its immunomodulatory effect is unknown. Methods The immunosuppressive features of UDCA were studied in vivo, in mice, in an ovalbumin (OVA)-driven eosinophilic airway inflammation model. To study the mechanism of action of UDCA, we analyzed the effect of UDCA on eosinophils, T cells, and dendritic cell (DCs). DC function was studied in greater detail, focussing on migration and T-cell stimulatory strength in vivo and interaction with T cells in vitro as measured by time-lapse image analysis. Finally, we studied the capacity of UDCA to Results Ursodeoxycholic acid treatment of OVA-sensitized mice prior to OVA aerosol challenge significantly reduced eosinophilic airway inflammation compared with control animals. DCs expressed the farnesoid X receptor for UDCA. Ursodeoxycholic acid strongly promoted interleukin (IL)-12 production and enhanced the migration in DCs. The time of interaction between DCs and T cells was sharply reduced in vitro by UDCA treatment of the DCs resulting in a remarkable T-cell cytokine production. Ursodeo Conclusion Ursodeoxycholic acid has the potency to suppress eosinophilic inflammation outside the GI tract. This potential comprises to alter critical function of DCs, in essence, the effect of UDCA on DCs through the modulation of the DC/T cell interaction.