The limited success of cancer immunotherapy is often attributed to the loss of antigen-specific T cell function in situ. However, the mechanism for this loss of function is unknown. In this study, we describe a population of tumor-associated DCs (TADCs) in both human and mouse prostate cancer that tolerizes and induces suppressive activity in tumor-specific T cells. In tumors from human prostate cancer patients and transgenic adenocarcinoma of the mouse prostate (TRAMP) mice, TADCs expressed elevated levels of FOXO3 and Foxo3, respectively, which correlated with expression of suppressive genes that negatively regulate T cell function. Silencing FOXO3 and Foxo3 with siRNAs abrogated the ability of human and mouse TADCs, respectively, to tolerize and induce suppressive activity by T cells. Silencing Foxo3 in mouse TADCs was also associated with diminished expression of tolerogenic mediators, such as indoleamine-2,3-dioxygenase, arginase, and TGF-β, and upregulated expression of costimulatory molecules and proinflammatory cytokines. Importantly, transfer of tumor-specific CD4+ Th cells into TRAMP mice abrogated TADC tolerogenicity, which was associated with reduced Foxo3 expression. These findings demonstrate that FOXO3 may play a critical role in mediating TADC-induced immune suppression. Moreover, our results identify what we believe to be a novel target for preventing CTL tolerance and enhancing immune responses to cancer by modulating the immunosuppressive activity of TADCs found in the tumor microenvironment.