Abstract Background Tumour specific effector T cells can be detected in the blood and tumours of patients with hepatocellular carcinoma but they fail to mount effective immune responses. Attempts to amplify anti-tumour immune responses using immunotherapy show promise, but are hampered by the presence of suppressive regulatory T cells (Tregs) that inhibit anti-tumour immune responses. Tregs are crucial in the maintenance of immune homoeostasis and in the prevention of autoreactive immune response but in the context of cancer they can suppress beneficial anti-tumour immunity leading to tumour progression. A novel subset of CD8 expressing Tregs has recently been described and we now report the presence of such cells in human hepatocellular carcinoma and define their functional and homing properties. Methods Fresh tissue from hepatocellular carcinoma and matched distal non-involved tissue were obtained from patients undergoing liver resection or transplantation at the Queen Elizabeth Hospital, Birmingham, after informed consent. Liver-derived T cells were isolated and phenotyped with multicolour flow cytometry including intracellular cytokine staining. CD8+Tregs were isolated with a Mo-Flow cell sorter for functional assays. Distribution of CD8+Tregs was investigated by immunohistochemistry and immunofluorescence. Findings The percentage of CD8+Tregs (defined as CD8+CD25highCD127lowFoxP3+) infiltrating hepatocellular carcinoma tumours was significantly greater than matched non-involved liver. Tumour-derived CD8+Treg isolated by Mo-Flo sorting suppressed allogeneic effectors cells in vitro and secreted interleukin (IL) 10. By contrast, T-cell interferon-γ production was decreased within the tumour compared with matched non-involved liver. The chemokine receptor CXCR3 which is involved in T-cell recruitment to the inflamed liver was highly expressed on tumour-derived CD8+Tregs. Interpretation A novel subset of functional IL-10 secreting CD8+Tregs may suppress anti-tumour immunity in hepatocellular carcinoma. Their expression of CXCR3 provides a potential mechanism for recruitment into the tumour environment. Funding Wellcome Trust.