Ag-specific T cell tolerance plays a critical role in tumor escape. Recent studies implicated myeloid-derived suppressor cells (MDSCs) in the induction of CD8(+) T cell tolerance in tumor-bearing hosts. However, the mechanism of this phenomenon remained unclear. We have found that incubation of Ag-specific CD8(+) T cells, with peptide-loaded MDSCs, did not induce signaling downstream of TCR. However, it prevented subsequent signaling from peptide-loaded dendritic cells. Using double TCR transgenic CD8(+) T cells, we have demonstrated that MDSC induced tolerance to only the peptide, which was presented by MDSCs. T cell response to the peptide specific to the other TCR was not affected. Incubation of MDSCs with Ag-specific CD8(+) T cells caused nitration of the molecules on the surface of CD8(+) T cells, localized to the site of physical interaction between MDSC and T cells, which involves preferentially only TCR specific for the peptide presented by MDSCs. Postincubation with MDSCs, only nitrotyrosine-positive CD8(+) T cells demonstrated profound nonresponsiveness to the specific peptide, whereas nitrotyrosine-negative CD8(+) T cells responded normally to that stimulation. MDSCs caused dissociation between TCR and CD3zeta molecules, disrupting TCR complexes on T cells. Thus, these data describe a novel mechanism of Ag-specific CD8(+) T cell tolerance in cancer.