Regulatory T cells (Tregs) are major components of tumor-infiltrating immune cells with potent immunosuppressive properties in gastric cancer (GC) microenvironment. However, different subsets of the Tregs and their relevance to GC are unknown. Here, we found that patients with GC showed a significantly higher Tregs infiltration in tumors, and CD45RA-CCR7- Treg subset constituted most tumor-infiltrating Tregs. Tumor-infiltrating CD45RA-CCR7- Treg subset with an effector/memory phenotype accumulated in tumors and expressed low level of HLA-DR. Gastric tumor-derived TNF-α induced CD45RA-CCR7- Treg subset with similar phenotype to their status in tumors and inhibited their HLA-DR expression via activating STAT3 phosphorylation. These tumor-associated CD45RA-CCR7- Treg subset exerted superior immunosuppressive properties to effectively suppress CD8+ T cells' anti-tumor function including CD8+ T-cell IFN-γ and granzyme B (GrB) production as well as CD8+ T-cell proliferation in vitro, and also contributed to the growth and progression of human gastric tumors in vivo, via IL-10 secretion and cell-cell contact mechanisms. Moreover, increased tumor-infiltrating CD45RA-CCR7- Treg subset as well as higher intratumoral CD45RA-CCR7- Treg/CD8+ T-cell ratio was associated with advanced disease progression and reduced GC patient survival. This study therefore identifies a novel immunosuppressive pathway involving CD45RA-CCR7- Treg subset development within the GC microenvironment. Efforts to inhibit this pathway may therefore prove a valuable strategy to prevent, and to treat this immune suppressive of GC.