Vancomycin has been shown to affect tumor necrosis factor-alpha (TNF-α) pathways as an immunomodulator; this is thought to be separate from its function as an antibiotic [1]. Previous studies have shown that oral vancomycin (OV) is an effective treatment for concomitant primary sclerosing cholangitis (PSC) and inflammatory bowel disease (IBD) in children [2, 3]. Since both diseases are associated with immune dysfunction, we hypothesized that vancomycin’s therapeutic effect in IBD and PSC occurs through immunomodulation. Therefore, we examined the in vivo immunological changes that occur during OV treatment of 14 children with PSC and IBD. Within 3 months of OV administration, peripheral gamma-glutamyl transpeptidase (GGT) and alanine aminotransferase (ALT) concentrations, white blood cell (WBC) counts, and neutrophil counts normalized from elevated levels before treatment. Patients also demonstrated improved biliary imaging studies, liver biopsies and IBD symptoms and biopsies. Additionally, plasma transforming growth factor beta (TGF-β) levels were increased without concurrent shifts in Th1-or Th2-associated cytokine production. Peripheral levels of CD4 + CD25hiCD127lo and CD4 + FoxP3+ regulatory T (Treg) cells also increased in OV-treated PSC + IBD patients compared to pretreatment levels. A unique case study shows that the therapeutic effects of OV in the treatment of PSC + IBD do not always endure after OV discontinuation, with relapse of PSC associated with a decrease in blood Treg levels; subsequent OV retreatment was then associated with a rise in blood Treg levels and normalization of liver function tests (LFTs). Taken together, these studies support immune-related pathophysiology of PSC with IBD, which is responsive to OV.