T cell tolerance is a critical element of tumor escape. However, the mechanism of tumor-associated T cell tolerance remains unresolved. Using an experimental system utilizing the adoptive transfer of transgenic T cells into naive recipients, we found that the population of Gr-1+ immature myeloid cells (ImC) from tumor-bearing mice was able to induce CD8+ T cell tolerance. These ImC accumulate in large numbers in spleens, lymph nodes, and tumor tissues of tumor-bearing mice and are comprised of precursors of myeloid cells. Neither ImC from control mice nor progeny of tumor-derived ImC, including tumor-derived CD11c+ dendritic cells, were able to render T cells nonresponsive. ImC are able to take up soluble protein in vivo, process it, and present antigenic epitopes on their surface and induce Ag-specific T cell anergy. Thus, this is a first demonstration that in tumor-bearing mice CD8+ T cell tolerance is induced primarily by ImC that may have direct implications for cancer immunotherapy.