Interleukin-10 plays a vital role in maintaining peripheral immunotolerance and favors a regulatory immune milieu through the suppression of T effector cells. Inflammation-induced microvascular loss has been associated with airway epithelial injury, which is a key pathological source of graft malfunctioning and subepithelial fibrosis in rejecting allografts. The regulatory immune phase maneuvers alloimmune inflammation through various regulatory modulators, and thereby promotes graft microvascular repair and suppresses the progression of fibrosis after transplantation. The present study was designed to investigate the therapeutic impact of IL-10 on immunotolerance, in particular, the reparative microenvironment, which negates airway epithelial injury, and fibrosis in a mouse model of airway graft rejection. Here, we depleted and reconstituted IL-10, and serially monitored the phase of immunotolerance, graft microvasculature, inflammatory cytokines, airway epithelium, and subepithelial collagen in rejecting airway transplants. We demonstrated that the IL-10 depletion suppresses FOXP3+ Tregs, tumor necrosis factor-inducible gene 6 protein (TSG-6), graft microvasculature, and establishes a pro-inflammatory phase, which augments airway epithelial injury and subepithelial collagen deposition while the IL-10 reconstitution facilitates FOXP3+ Tregs, TSG-6 deposition, graft microvasculature, and thereby favors airway epithelial repair and subepithelial collagen suppression. These findings establish a potential reparative modulation of IL-10-associated immunotolerance on microvascular, epithelial, and fibrotic remodeling, which could provide a vital therapeutic option to rescue rejecting transplants in clinical settings.