Regulatory T-cells (T(Reg) cells) are increased in patients with multiple myeloma (MM). We investigated whether MM cells could generate and/or expand T(Reg) cells as a method of immuno-surveillance avoidance. In an in vitro model, CD4(+)CD25(-)FoxP3(-) T-cells co-cultured with malignant plasma cells (primary MM cells and cell lines) induced a significant generation of CD4(+)CD25(+)FoxP3(+) inducible T(Reg) cells (tT(Reg) cells; p<0.0001), in a contact-dependent manner. tT(Reg) cells were polyclonal, demonstrated a suppressive phenotype and phenotypically, demonstrated increased FoxP3 (p = 0.0001), increased GITR (p<0.0001), increased PD1 (p = 0.003) and decreased CD62L (p = 0.007) expression compared with naturally occurring T(Reg) cells. FACS-sorted tT(Reg) cells differentiated into FoxP(+)IL-17(+) and FoxP3(-)IL-17(+) CD4(+) cells upon TCR-mediated stimulation. Blocking experiments with anti-ICOS-L MoAb resulted in a significant inhibition of tT(Reg) cell generation whereas both IL-10 & TGFβ blockade did not. MM tumour cells can directly generate functional T(Reg) cells in a contact-dependent manner, mediated by ICOS/ICOS-L. These features suggest that tumour generation of T(Reg) cells may contribute to evasion of immune surveillance by the host.