AbstractSubstantial evidence indicates that inflammation is a critical component of tumor progression. The proinflammatory IL‐17‐producing cells have recently been detected in tumors, but the effect of IL‐17 on antigen‐presenting cells in tumors is presently unknown. We recently found that B7‐H1+ macrophages (Mφs) were enriched predominantly in the peritumoral stroma of hepatocellular carcinomas (HCCs). Here, we found a positive correlation between IL‐17‐producing cells and B7‐H1‐expressing Mφs in the same area. The B7‐H1+ monocytes/Mφs from HCC tissues expressed significantly more HLA‐DR, CD80, and CD86 than B7‐H1– cells. Accordingly, IL‐17 could activate monocytes to express B7‐H1 in a dose‐dependent manner. Although culture supernatants derived from hepatoma cells also induced B7‐H1 expression on monocytes, IL‐17 additionally increased hepatoma‐mediated B7‐H1 expression. Autocrine inflammatory cytokines released from IL‐17‐activated monocytes stimulated B7‐H1 expression. Moreover, these IL‐17‐exposed monocytes effectively suppressed cytotoxic T‐cell immunity in vitro; the effect could be reversed by blocking B7‐H1 on those monocytes. Consistent with this, cytotoxic T cells from HCC tissues expressed significant B7‐H1 receptor programmed death 1 (PD‐1) and exhibited an exhausted phenotype. These data reveal a fine‐tuned collaborative action between different stromal cells to counteract T‐cell responses in tumors. Such IL‐17‐mediated immune tolerance should be considered for the rational design of effective immune‐based anti‐cancer therapies.