Immunosuppression may contribute to the progression of cancer. In this study we assessed the structural and functional status of T cells from tumor specimens obtained from patients with early stage non-small cell lung cancer and late-stage ovarian cancer. Although some groups have described structural alterations in the TCR in patients with other malignancies, we did not observe decreased expression of the CD3ζ subunit in the tumor-associated T cells. However, increased percentages of CD4⁺CD25⁺ T cells were observed in the non-small cell lung cancer tumor-infiltrating lymphocytes and ovarian cancer tumor-associated lymphocytes. Furthermore, these CD4⁺CD25⁺ T cells were found to secrete transforming growth factor-β, consistent with the phenotype of regulatory T cells. Despite a generalized expression of lymphocyte activation markers in the tumor-associated T-cell populations, the CD8⁺ T cells expressed low levels of CD25. To determine whether expression of CD25 could be restored on the CD8 cells, tumor-associated T cells were stimulated with anti-CD3 and anti-CD28 monoclonal antibodies. After stimulation, nearly all of the CD8 T cells expressed CD25. Furthermore, despite the low levels of interleukin 2, IFN-γ, and tumor necrosis factor-α secretion by the tumor-associated and peripheral blood T cells at baseline, stimulation with anti-CD3 and anti-CD28 monoclonal antibodies significantly increased the fraction of cells producing these cytokines. Thus, tumor-associated T cells from patients with early and late-stage epithelial tumors contain increased proportions of CD4⁺CD25⁺ T cells that secrete the immunosuppressive cytokine transforming growth factor-β. Furthermore, our results are consistent with previous reports showing impaired expression of CD25 on CD8⁺ T cells in cancer patients. Finally, increased lymphocyte costimulation provided by triggering the CD28 receptor is able to increase CD25 expression and cytokine secretion in tumor-associated T cells. These observations provide evidence for the contribution of regulatory T cells to immune dysfunction in cancer patients.