Decoy receptor 3 (DcR3) is a member of the TNF receptor superfamily and is up-regulated in tumors originating from a diversity of lineages. DcR3 is capable of promoting angiogenesis, inducing dendritic cell apoptosis, and modulating macrophage differentiation. Since tumor-associated macrophages (TAMs) are the major infiltrating leukocytes in most malignant tumors, we used microarray technology to investigate whether DcR3 contributes to the development of TAMs. Among the DcR3-modulated genes expressed by TAMs, those that encode proteins involved in MHC class II (MHC-II)-dependent antigen presentation were down-regulated substantially, together with the master regulator of MHC-II expression (the class II transactivator, CIITA). The ERK- and JNK-induced deacetylation of histones associated with the CIITA promoters was responsible for DcR3-mediated down-regulation of MHC-II expression. Furthermore, the expression level of DcR3 in cancer cells correlated inversely with HLA-DR levels on TAMs and with the overall survival time of pancreatic cancer patients. The role of DcR3 in the development of TAMs was further confirmed using transgenic mice overexpressing DcR3. This elucidates the molecular mechanism of impaired MHC-II-mediated antigen presentation by TAMs, and raises the possibility that subversion of TAM-induced immunosuppression via inhibition of DcR3 expression might represent a target for the design of new therapeutics.