An adequate level of arginine in the tissue microenvironment is essential for T cell activity and survival. Arginine levels are regulated by the arginine-catabolizing enzyme, arginase (ARG). It has been reported that arginase II (ARG2), one of two ARGs, is aberrantly expressed in prostate cancer cells, which convert arginine into ornithine, resulting in a lack of arginine that weakens tumor-infiltrating lymphocytes and renders them dysfunctional. However, immune suppression mediated by ARG2-expressing cancer cells in lung cancer has not been observed. Here we studied the expression of ARG2 in pancreatic ductal carcinoma (PDC) tissue clinicopathologically by examining over 200 cases of PDC. In contrast to prostate cancer, ARG2 expression was rarely demonstrated in PDC cells by immunohistochemistry, and instead ARG2 was characteristically expressed in α-smooth muscle actin-positive cancer-associated fibroblasts (CAFs), especially those located within and around necrotic areas in PDC. The presence of ARG2-expressing CAFs was closely correlated with shorter overall survival (OS; P = 0.003) and disease-free survival (DFS; P = 0.0006). Multivariate Cox regression analysis showed that the presence of ARG2-expressing CAFs in PDC tissue was an independent predictor of poorer OS (hazard ratio [HR] = 1.582, P = 0.007) and DFS (HR = 1.715, P = 0.001) in PDC patients. In addition to the characteristic distribution of ARG2-expressing CAFs, such CAFs co-expressed carbonic anhydrase IX, SLC2A1, or HIF-1α, markers of hypoxia, in PDC tissue. Furthermore, in vitro experiments revealed that cultured fibroblasts extracted from PDC tissue expressed the ARG2 transcript after exposure to hypoxia, which had arginase activity. These results indicate that cancer cell-mediated immune suppression through ARG2 expression is not a general event and that the presence of ARG2-expressing CAFs is an indicator of poor prognosis, as well as hypoxia, in PDC tissue.