The peripheral tolerance mechanism prevents effective antitumor immunity, even though tumor cells possess recognizable tumor-associated Ags. Recently, it has been elucidated that regulatory T cells (Treg) play a critical role in maintaining not only self-tolerance, but also tolerance of tumor cells. However, because the Treg that maintain self-tolerance arise naturally in the thymus and are thought to be anergic in peripheral, it is still unclear where and when Treg for tumor cells are generated. In this study we analyze tumor-draining lymph nodes (LNs) and demonstrate that both antitumor effector T cells and Treg capable of abrogating the antitumor reactivity of the effector T cells are primed in the same LNs during tumor progression. The regulatory activity generated in tumor-draining LNs exclusively belonged to the CD4+ T cell subpopulation that expresses both CD25 and a high level of CD62L. Forkhead/winged helix transcription factor gene expression was detected only in the CD62L high CD4+ CD25+ T cells. CD62L high CD4+ CD25+ Treg and CD62L low CD4+ CD25+ T cells, which possess effector T cell functions, had comparable expression of LFA-1, VLA-4, CTLA-4, lymphocyte activation gene-3, and glucocorticoid-induced TNFR. Thus, only CD62L expression could distinguish regulatory CD4+ CD25+ cells from effector CD4+ CD25+ cells in draining LNs as a surface marker. The Treg generated in tumor-draining LNs possess the same functional properties as the Treg that arise naturally in the thymus but recognize tumor-associated Ag. CD62L high CD4+ CD25+ Treg contained a subpopulation that expressed CD86. Blocking experiments revealed that ligation of CTLA-4 on effector T cells by CD86 on Treg plays a pivotal role in regulating CD4+ effector T cells.