Solid tumors are frequently infiltrated by large numbers of non-cancerous hematopoietic cells, including macrophages. The pro-tumor or anti-tumor role of macrophages in the tumor microenvironment is unclear. Tumors are also characterized by regions of low oxygen tension. Mammalian cells respond transcriptionally to low oxygen tension via the Hypoxia-Inducible Factor-1alpha, which upregulates genes involved in glycolysis, angiogenesis, and cell survival. Previous work has shown that myeloid cells deficient for HIF-1alpha are impaired in their inflammatory responses. To genetically test the role of the myeloid hypoxic response mediated by HIF- 1alpha in the tumor microenvironment, we used the loxP/ tissue specifc cre recombianse to generate murine myeloid specific deletion of HIF-1alpha in rodents with an established transgenic model of breast cancer, MMTV-PyMT. Lack of HIF-1alpha in the tumor microenvironment resulted in tumors with less mass, but with increased cell death. Enzyme activities of iNOS and ArgI were reduced in whole tumor lysates. In vitro experiments demonstrated HIF-1 alpha, not HIF-2alpha, control of L-arginine degrading enzymes iNOS and arginase I. Further characterization of the relationship between macrophages and tumor cells using co-culture strategies revealed that tumor cells induce ArgI in a HIF-1alpha and hypoxia dependent fashion at the protein level. iNOS was detected at the RNA level after co -culture with MECs, but was scarcely detectable at the protein level. ArgI and iNOS have been implicated in T cell immunosuppression. PyMT tumor bearing mice displayed evidence of T cell activation, yet T cells isolated from myeloid HIF WT tumors were less responsive than those from myeloid HIF KO tumors after stimulation with CD3/28 ex vivo. We propose myeloid HIF-1alpha contributes to local tumor immunosuppression of T cell function. This suggests inhibition of HIF-1 may have beneficial effects not only by blocking tumor growth and survival under hypoxia, but also by relieving myeloid cell mediated immunosuppression in the tumor microenvironment