Substantial evidence indicates that immune activation at stroma can be rerouted in a tumor-promoting direction. CD69 is an immunoregulatory molecule expressed by early-activated leukocytes at sites of chronic inflammation, and CD69(+) T cells have been found to promote human tumor progression. In this study, we showed that, upon encountering autologous CD69(+) T cells, tumor macrophages (MΦs) acquired the ability to produce much greater amounts of IDO protein in cancer nests. The T cells isolated from the hepatocellular carcinoma tissues expressed significantly more CD69 molecules than did those on paired circulating and nontumor-infiltrating T cells; these tumor-derived CD69(+) T cells could induce considerable IDO in monocytes. Interestingly, the tumor-associated monocytes/MΦs isolated from hepatocellular carcinoma tissues or generated by in vitro culture effectively activated circulating T cells to express CD69. IL-12 derived from tumor MΦs was required for early T cell activation and subsequent IDO expression. Moreover, we found that conditioned medium from IDO(+) MΦs effectively suppressed T cell responses in vitro, an effect that could be reversed by adding extrinsic IDO substrate tryptophan or by pretreating MΦs with an IDO inhibitor 1-methyl-DL-tryptophan. These data revealed a fine-tuned collaborative action between different types of immune cells to counteract T cell responses in tumor microenvironment. Such an active induction of immune tolerance should be considered for the rational design of effective immune-based anticancer therapies.