Epithelial ovarian cancer (EOC) is the fifth most common cause of cancer death among women. Despite its immunogenicity, effective antitumor responses are limited, due, in part, to the presence of forkhead box protein 3–positive (Foxp3⁺) T regulatory (Treg) cells in the tumor microenvironment. However, the mechanisms that regulate the accumulation and the suppressive function of these Foxp3⁺ Treg cells are poorly understood. Here, we found that the majority of Foxp3⁺ Treg cells accumulating in the tumor microenvironment of EOCs belong to the subset of Foxp3⁺ Treg cells expressing inducible costimulator (ICOS). The expansion and the suppressive function of these cells were strictly dependent on ICOS-L costimulation provided by tumor plasmacytoid dendritic cells (pDC). Accordingly, ICOS⁺ Foxp3⁺ Treg cells were found to localize in close vicinity of tumor pDCs, and their number directly correlated with the numbers of pDCs in the tumors. Furthermore, pDCs and ICOS⁺ Foxp3⁺ Treg cells were found to be strong predictors for disease progression in patients with ovarian cancer, with ICOS⁺ Treg cell subset being a stronger predictor than total Foxp3⁺ Treg cells. These findings suggest an essential role for pDCs and ICOS-L in immunosuppression mediated by ICOS⁺ Foxp3⁺ Treg cells, leading to tumor progression in ovarian cancer. Cancer Res; 72(20); 5240–9. ©2012 AACR.