T cells can inhibit tumor growth, but their function in the tumor microenvironment is often suppressed. Many solid tumors exhibit abundant macrophage infiltration and low oxygen tension, yet how hypoxic conditions may affect innate immune cells and their role in tumor progression is poorly understood. Targeted deletion of the hypoxia-responsive transcription factor hypoxia-inducible factor-1α (HIF-1α) in macrophages in a progressive murine model of breast cancer resulted in reduced tumor growth, although vascular endothelial growth factor-A levels and vascularization were unchanged. Tumor-associated macrophages can suppress tumor-infiltrating T cells by several mechanisms, and we found that hypoxia powerfully augmented macrophage-mediated T-cell suppression in vitro in a manner dependent on macrophage expression of HIF-1α. Our findings link the innate immune hypoxic response to tumor progression through induction of T-cell suppression in the tumor microenvironment. Cancer Res; 70(19); 7465–75. ©2010 AACR.