Suppression of dendritic cell function in cancer patients is thought to contribute to the inhibition of immune responses and disease progression. Molecular mechanisms of this suppression remain elusive, however. Here, we show that a fraction of blood monocyte-derived myeloid dendritic cells (MDCs) express B7-H1, a member of the B7 family, on the cell surface. B7-H1 could be further upregulated by tumor environmental factors. Consistent with this finding, virtually all MDCs isolated from the tissues or draining lymph nodes of ovarian carcinomas express B7-H1. Blockade of B7-H1 enhanced MDC-mediated T-cell activation and was accompanied by downregulation of T-cell interleukin (IL)-10 and upregulation of IL-2 and interferon (IFN)-gamma. T cells conditioned with the B7-H1-blocked MDCs had a more potent ability to inhibit autologous human ovarian carcinoma growth in non-obese diabetic-severe combined immunodeficient (NOD-SCID) mice. Therefore, upregulation of B7-H1 on MDCs in the tumor microenvironment downregulates T-cell immunity. Blockade of B7-H1 represents one approach for cancer immunotherapy.