Attempts to ameliorate the poor prognosis of pancreatic cancer have been largely unsuccessful. Interventions to enhance patients’ immune responses to malignancies have been also largely unsuccessful. We now describe an immune-escape mechanism mediated by the inhibitory receptor immunoglobulin-like transcript 3 (ILT3) which may be responsible for such failures. Using a humanized severe combined immunodeficiency (SCID) mouse model, we demonstrate that soluble and membrane ILT3 induce CD8+ T suppressor cells and prevent rejection of allogeneic tumor transplants. Furthermore, we found that patients with carcinoma of the pancreas produce the soluble ILT3 protein, which induces the differentiation of CD8+ T suppressor cells and impairs T cell responses in mixed lymphocyte culture. These responses are restored by anti-ILT3 mAb or by depletion of sILT3 from the serum. Immunohistochemical staining of biopsies from the tumors and metastatic lymph nodes suggest that CD68+ tumor associated macrophages represent the major source of soluble ILT3. Alternative splicing, resulting in the loss of the ILT3 transmembrane domain may contribute to the release of ILT3 in the circulation. These data suggest that ILT3 depletion or blockade is crucial to the success of immunobiotherapy, particularly in pancreatic cancer.