The fate of tumor-specific CD4⁺ T cells is central to the outcome of the host immune response to cancer. We show that tumor antigen recognition by a subset of CD4⁺ T cells led to their differentiation into cells capable of suppressing naive and Th1 effector cells. Such tumor-induced regulatory T cells (TMTregs) arose both from precommitted “natural” regulatory T cells and CD4⁺CD25^–GITR^low precursors. Once induced, TMTregs were capable of maintaining suppressor activity long after transfer into antigen-free recipients. Suppression was mediated by GITR^high cells residing within both CD25⁺ and CD25^– subsets. Vaccination of the tumor-bearing host concomitantly expanded TMTregs and effector cells, but suppression was dominant, blunting the expansion of naive tumor-specific T cells and blocking the execution of effector function in vitro and in vivo. These studies illustrate the possibility that therapeutic vaccination could actually worsen host tolerance to tumor antigens and support treatment paradigms that seek to not only increase the frequency of tumor-specific T cells, but to do so in conjunction with strategies that inactivate or remove regulatory T-cell populations.