A newly described subset of monocytes has been identified in peritoneal exudate cells (PEC) from the malignant ascites from patients with ovarian cancer. These cells were characterized by the production of IL-10 and TGF-beta2, but not IL-12, IL-1alpha, or TNF-alpha, and they expressed CD14, CD16, and CD54, but not HLA-DR, CD80, CD86, CD11a, CD11b, or CD25 cell surface Ags. Since this subset of monocytes could affect the modulation of tumor immune responses in vivo, studies were undertaken to determine their effect on the activation and proliferation of autologous T cells from the peritoneal cavity of patients with ovarian carcinoma. Expression of cytokine-specific transcripts in T cells was determined by RT-PCR. Transcripts for the following cytokines were detected in patient specimens that also contained the IL-10-producing monocytes IL-2 (12 of 17 specimens), GM-CSF (9 of 17 specimens), IFN-gamma (6 of 17 specimens), and TNF-alpha (4 of 17 specimens). Cytokine production by T cells was determined by intracellular flow cytometry and by ELISA. IL-2 and IFN-gamma proteins, unlike their transcripts, were detected only in specimens that lacked IL-10-producing monocytes. IL-10-producing monocytes cocultured with autologous T cells inhibited the proliferation of the T cells in response to PHA. However, T cells cocultured with PEC from which the IL-10-producing monocytes had been removed did not inhibit T cell proliferation. Moreover, the inhibition of T cell proliferation by IL-10-producing monocytes could be reversed by adding neutralizing Abs to both IL-10R and TGF-beta2. These results suggest that this subset of monocytes may modulate immune responses by inhibiting T cell proliferation and cytokine protein production.