CD4⁺CD25⁺ regulatory T cells have been characterized as a critical population of immunosuppressive cells. They play a crucial role in cancer progression by inhibiting the effector function of CD4⁺ or CD8⁺ T lymphocytes. However, whether regulatory T lymphocytes that expand during tumor progression can modulate dendritic cell function is unclear. To address this issue, we have evaluated the inhibitory potential of CD4⁺CD25⁺ regulatory T cells from mice bearing a BCR–ABL⁺ leukemia on bone marrow-derived dendritic cells. We present data demonstrating that CD4⁺CD25⁺FoxP3⁺ regulatory T cells from tumor-bearing animals impede dendritic cell function by down-regulating the activation of the transcription factor NF-κB. The expression of the co-stimulatory molecules CD80, CD86 and CD40, the production of TNF-α, IL-12, and CCL5/RANTES by the suppressed DC is strongly down-regulated. The suppression mechanism requires TGF-β and IL-10 and is associated with induction of the Smad signaling pathway and activation of the STAT3 transcription factor.