In ovarian cancer, the immune system fails to eradicate established tumors partly due to the induction of immune tolerance within tumor microenvironment. In this study, we investigated the contribution of plasmacytoid dendritic cells (pDC) in the establishment of immune tolerance in a cohort of 44 ovarian cancer patients. In the tumor and malignant ascites, CD4(+)CD123(+)BDCA2(+) pDC were the most abundant dendritic cell subset; however, they were profoundly depleted in peripheral blood. The presence of pDC in primary ovarian cancer, but not ascites, was an independent prognostic factor associated with early relapse. Following chemotherapy, we observed a partial restoration of blood pDC levels in patients in complete remission. These findings show preferential recruitment of pDC into tumors where they express a partially mature phenotype that may reflect an in situ activation. Importantly, compared with pDC found in ascites or blood, tumor-associated pDC (TApDC) produced less IFN-α, TNF-α, IL-6, macrophage inflammatory protein-1β, and RANTES in response to toll-like receptor stimulation, and alterations in pDC functions were mainly mediated through tumor-derived TNF-α and TGF-β. Unlike ascites-derived pDC, TApDC induced IL-10 production from allogeneic naive CD4(+) T lymphocytes, suggesting the existence of a paracrine immunosuppressive loop. Taken together, our findings indicate that both local and systemic dysfunction of pDC play a critical role in the progression of ovarian cancer via induction of immune tolerance.