Dysfunction of the host immune system in cancer patients can be due to a number of factors, including suppression of tumor-associated antigen reactive lymphocytes by CD4(+)CD25(+) regulatory T (Treg) cells. Several studies suggest that Tregs are elevated in cancer patients and that depletion of Tregs may enhance the antitumor immunity of host, but the pathogenic and mechanistic relationship between cancer and Tregs is still unclear. In this report, we show that Tregs are increased in peripheral blood mononuclear cells (PBMCs) from hepatocellular carcinoma (HCC) patients and positively correlate with tumor burden. When PBMCs are co-cultured with human hepatoma cell lines Huh7, HepG2, and Hclone5, CD4(+)CD25(+)-T cell populations increase in frequency and undergo phenotypic and functional changes. CD45RA, CD45RO, CD69, CD62L, GITR, CTLA-4, Ki67, granzyme A, granzyme B, and FOXP3 expression were upregulated in CD4(+)CD25(+) cells after in vitro exposure to HCC cell lines. CD4(+)CD25(+) T cells from PBMCs that were co-cultured with Huh7 cells also have higher suppressor ability compared to that of the CD4(+)CD25(+) T cells from control PBMC. Huh7 culture supernatants appear to promote CD4(+)CD25(+) T-cell proliferation and inhibit CD4(+)CD25(-) T-cell proliferation. In conclusion, these results strongly suggest that tumor-related factors not only induce and expand CD4(+)CD25(+) cells, but also enhance their suppressor ability.