Active suppression of tumor-specific T lymphocytes can limit the efficacy of immune surveillance and immunotherapy. While tumor-recruited CD11b⁺ myeloid cells are known mediators of tumor-associated immune dysfunction, the true nature of these suppressive cells and the fine biochemical pathways governing their immunosuppressive activity remain elusive. Here we describe a population of circulating CD11b⁺IL-4 receptor α⁺ (CD11b⁺IL-4Rα⁺), inflammatory-type monocytes that is elicited by growing tumors and activated by IFN-γ released from T lymphocytes. CD11b⁺IL-4Rα⁺ cells produced IL-13 and IFN-γ and integrated the downstream signals of these cytokines to trigger the molecular pathways suppressing antigen-activated CD8⁺ T lymphocytes. Analogous immunosuppressive circuits were active in CD11b⁺ cells present within the tumor microenvironment. These suppressor cells challenge the current idea that tumor-conditioned immunosuppressive monocytes/macrophages are alternatively activated. Moreover, our data show how the inflammatory response elicited by tumors had detrimental effects on the adaptive immune system and suggest novel approaches for the treatment of tumor-induced immune dysfunctions.