Regulatory T-cells (T_Reg cells) are increased in patients with multiple myeloma (MM). We investigated whether MM cells could generate and/or expand T_Reg cells as a method of immuno-surveillance avoidance. In an in vitro model, CD4⁺CD25^-FoxP3^- T-cells co-cultured with malignant plasma cells (primary MM cells and cell lines) induced a significant generation of CD4⁺CD25⁺FoxP3⁺ inducible T_Reg cells (tT_Reg cells; p<0.0001), in a contact-dependent manner. tT_Reg cells were polyclonal, demonstrated a suppressive phenotype and phenotypically, demonstrated increased FoxP3 (p = 0.0001), increased GITR (p<0.0001), increased PD1 (p = 0.003) and decreased CD62L (p = 0.007) expression compared with naturally occurring T_Reg cells. FACS-sorted tT_Reg cells differentiated into FoxP⁺IL-17⁺ and FoxP3^-IL-17⁺ CD4⁺ cells upon TCR-mediated stimulation. Blocking experiments with anti-ICOS-L MoAb resulted in a significant inhibition of tT_Reg cell generation whereas both IL-10 & TGFβ blockade did not. MM tumour cells can directly generate functional T_Reg cells in a contact-dependent manner, mediated by ICOS/ICOS-L. These features suggest that tumour generation of T_Reg cells may contribute to evasion of immune surveillance by the host.