The underlying mechanisms of tumor-induced immune suppression need to be fully understood. Regulatory T (Treg) cells have been shown to play an important role in tumor immune escape. Until now, many subsets of Treg cells have been described that can suppress T cell response via different mechanisms. CD69 is generally regarded as one of the activating markers; however, recent studies show that CD69 may exert regulatory function in the immune response. In this study, we have identified tumor-induced CD69(+)CD4(+)CD25(-) T cells as a new subset of CD4(+) Treg cells. CD69(+)CD4(+)CD25(-) T cells increase dramatically along tumor progression, with up to 40% of CD4(+) T cells in the advanced tumor-bearing mice. Distinct from the previously described CD4(+) Treg cell subsets, CD69(+)CD4(+)CD25(-) T cells express high CD122, but they do not express Foxp3 and secrete IL-10, TGF-beta1, IL-2, and IFN-gamma. CD69(+)CD4(+)CD25(-) T cells are hyporesponsive and can suppress CD4(+) T cell proliferation in a cell-cell contact manner. Interestingly, the fixed CD69(+)CD4(+)CD25(-) T cells still have suppressive activity, and neutralizing Abs against TGF-beta1 can block their suppressive activity. We found that CD69(+)CD4(+)CD25(-) T cells express membrane-bound TGF-beta1, which mediates suppression of T cell proliferation. Furthermore, engagement of CD69 maintains high expression of membrane-bound TGF-beta1 on CD69(+)CD4(+)CD25(-) T cells via ERK activation. Our results demonstrate that CD69(+)CD4(+)CD25(-) T cells act as a new subset of regulatory CD4(+) T cells, with distinct characteristics of negative expression of Foxp3, no secretion of IL-10, but high expression of CD122 and membrane-bound TGF-beta1. Our data contribute to the better understanding of mechanisms for tumor immune escape.