Impaired T-cell function in patients with advanced cancer has been a widely acknowledged finding, but mechanisms reported thus far are those primarily operating in the tumor microenvironment. Very few mechanisms have been put forth to explain several well-described defects in peripheral blood T cells, such as reduction in expression of signaling molecules, decreased production of cytokines, or increased apoptosis. We have closely examined the peripheral blood mononuclear cell (PBMC) samples derived from patients and healthy individuals, and we have observed an important difference that may underlie the majority of reported defects. We observed that in samples from patients only, an unusually large number of granulocytes copurify with low density PBMCs on a density gradient rather than sediment, as expected, to the bottom of the gradient. We also show that activating granulocytes from a healthy donor with N-formyl-l-methionyl-l-leucyl-l-phenylalanine could also cause them to sediment aberrantly and copurify with PBMCs, suggesting that density change is a marker of their activation. To confirm this, we looked for other evidence of in vivo granulocyte activation and found it in drastically elevated plasma levels of 8-isoprostane, a product of lipid peroxidation and a marker of oxidative stress. Reduced T-cell receptor ζ chain expression and decreased cytokine production by patients’ T cells correlated with the presence of activated granulocytes in their PBMCs. We showed that freshly obtained granulocytes from healthy donors, if activated, can also inhibit cytokine production by T cells. This action is abrogated by the addition of the hydrogen peroxide (H₂O₂) scavenger, catalase, implicating H₂O₂ as the effector molecule. Indeed, when added alone, H₂O₂ could suppress cytokine production of normal T cells. These findings indicate that granulocytes are activated in advanced cancer patients and that granulocyte-derived H₂O₂ is the major cause of severe systemic T-cell suppression.