Exosomes are nanometer sized vesicles, secreted by a diverse range of cell types, whose biological functions remain ambiguous. Several groups have demonstrated the potential of manipulating exosomes for activating cellular immune responses. The possibility that exosomes may inhibit immunological responses, however, has not been widely addressed. We have investigated if exosomes produced by tumor cells can inhibit immunological functions, through modulating expression of the NKG2D receptor by effector cells. Incubating tumor exosomes with fresh peripheral blood leukocytes resulted in a marked reduction in the proportion of NKG2D-positive CD3+CD8+ Cells, and CD3- cells by 48 h. This effect was dose dependent and was shown with exosomes from different tumor cells including breast cancer and mesothelioma. Analysis of tumor exosome-phenotype revealed positive expression of several NKG2D ligands, and antibody blocking experiments revealed the importance of such ligands in driving the reduction in the proportion of NKG2D-positive effector cells. The functional importance of the decrease in NKG2D-positive cells was addressed in vitro cytotoxicity assays. For example a CD8+ T cell line pre-incubated with tumor exosomes had significant decreased capacity to kill peptide-pulsed T2 target cells. These data highlight a role for tumor exosomes bearing NKG2D ligands as a mechanism contributing to cancer immune evasion.