T cells infiltrating tumors have a decreased expression of signal transduction proteins, a diminished ability to proliferate, and a decreased production of cytokines. The mechanisms causing these changes have remained unclear. We demonstrated recently that peritoneal macrophages stimulated with interleukin 4 + interleukin 13 produce arginase I, which decreases the expression of the T-cell receptor CD3zeta chain and impairs T-cell responses. Using a 3LL murine lung carcinoma model we tested whether arginase I was produced in the tumor microenvironment and could decrease CD3zeta expression and impair T-cell function. The results show that a subpopulation of mature tumor-associated myeloid cells express high levels of arginase I, whereas tumor cells and infiltrating lymphocytes do not. Arginase I expression in the tumor was seen on day 7 after tumor injection. Tumor-associated myeloid cells also expressed high levels of cationic amino acid transporter 2B, which allowed them to rapidly incorporate L-Arginine (L-Arg) and deplete extracellular L-Arg in vitro. L-Arg depletion by tumor-associated myeloid cells blocked the re-expression of CD3zeta in stimulated T cells and inhibited antigen-specific proliferation of OT-1 and OT-2 cells. The injection of the arginase inhibitor N-hydroxy-nor-L-Arg blocked growth of s.c. 3LL lung carcinoma in mice. High levels of arginase I were also found in tumor samples of patients with non-small cell carcinoma. Therefore, arginase I production by mature myeloid cells in the tumor microenvironment may be a central mechanism for tumor evasion and may represent a target for new therapies.