Dendritic cells (DC) have a critical effect on the outcome of adaptive immune responses against growing tumors. Whereas it is generally assumed that the presence of phenotypically mature DCs should promote protective antitumor immunity, evidence to the contrary does exist. We describe here a novel mechanism by which tumor-infiltrating dendritic cells (TIDC) actively contribute to the suppression of protective CD8(+) T-cell-based antitumor immunity. Using the BALB/NeuT model of spontaneously arising mammary carcinoma, we found that canonical MHC II(+)/CD11b(+)/CD11c(high) TIDCs act as regulatory DCs to suppress CD8(+) T-cell function, resulting in diminished T-cell-based antitumor immunity in vivo. Stimulation of naive T cells with regulatory TIDCs resulted in an altered cell fate program characterized by minimal T-cell expansion, impaired IFNgamma production, and anergy. Suppression by regulatory TIDCs overcame stimulatory signals provided by standard DCs, occurred in the absence of cognate interactions with T cells, and was mediated primarily by arginase metabolism of l-arginine. Immunosuppressive TIDCs were found in every murine tumor type examined and were phenotypically distinct from tumor-infiltrating CD11c(int-low)/CD11b(+)/Gr-1(+) myeloid-derived suppressor cells. Thus, within the tumor microenvironment, MHC II(+) TIDCs can function as potent suppressors of CD8(+) T-cell immunity.