During the past decade, the dual function of the immune system in tumor inhibition and tumor progression has become appreciated. We have previously reported that neu-specific T cells can induce rejection of neu positive mouse mammary carcinoma (MMC) and also facilitate tumor relapse by inducing neu antigen loss and epithelial to mesenchymal transition (EMT). Here, we sought to determine the mechanism by which CD8+ T cells either eliminate the tumor, or maintain tumor cells in a dormant state and eventually facilitate tumor relapse. We show that tumor cells that express high levels of IFN-γ Rα are eliminated by CD8+ T cells. In contrast, tumor cells that express low levels of IFN-γ Rα do not die but remain dormant and quiescent in the presence of IFN-γ producing CD8+ T cells until they hide themselves from the adaptive immune system by losing the tumor antigen, neu. Relapsed tumor cells show CD44+CD24- phenotype with higher rates of tumorigenesis, in vivo. Acquisition of CD44+CD24- phenotype in relapsed tumors was not solely due to Darwinian selection. Our data suggest that tumor cells control the outcome of tumor immune surveillance through modulation of the expression of IFN-γ Rα.