Transgenic female mice expressing the transforming rat oncogene c-erbB-2 (HER-2/neu) under the mouse mammary tumor virus (MMTV) promoter (BALB-neuT) spontaneously develop mammary carcinomas with a progression resembling that of human breast cancer. In these mice, activating antitumor immunotherapy fails to induce T cell–mediated cytotoxicity, suggesting a suppression of the immune response. We found a direct correlation between tumor multiplicity and an increased proportion of Gr-1⁺ (Ly6G)/Mac-1⁺(CD11b)/ER-MP12⁺(CD31) immature myeloid cells in the peripheral blood (PB) and spleen, suggesting that tumor load profoundly affects overall BALB-neuT hematopoiesis. In fact, myeloid colony formation was increased in bone marrow (BM) and spleen. The immature myeloid cells displayed suppressive activity on host T lymphocytes, which progressively failed to respond to alloantigens and CD3 triggering, while maintaining the ability to proliferate in response to nonspecific mitogens. Transplantation of normal BM into BALB-neuT mice readily resulted in hypertrophic hematopoiesis with myeloid cell expansion. This persistent influence of the tumor was mediated through the release of vascular endothelial growth factor (VEGF) but not granulocyte-macrophage colony-stimulating factor (GM-CSF), and was down-modulated when tumor load was reduced but not when BM was transplanted. Together, the data obtained in the BALB-neuT model of naturally occurring carcinogenesis show that tumor-associated immune suppression is secondary to a more general alteration of host hematopoiesis, conditioned by tumor-secreted soluble factors.