IRX-2, a natural cytokine biological with multiple components, has been used in preclinical and clinical studies to promote antitumor activity of T lymphocytes. To define cellular mechanisms responsible for antitumor effects of IRX-2, its ability to induce effector T cells (Teff) was examined in a model simulating the tumor microenvironment. An in vitro model containing conventional CD4(+)CD25(-) cells co-cultured with autologous immature dendritic cells, irradiated tumor cells, and cytokines was used to study differentiation and expansion of regulatory T cells (Treg) and Teff in the presence and absence of IRX-2. Phenotype, suppressor function, signaling, and cytokine production were serially measured using flow cytometry, Western blots, CFSE-based suppressor assays, and Luminex-based analyses. The presence of IRX-2 in the co-cultures promoted the induction and expansion of IFN-γ(+)Tbet(+) Teff and significantly (p < 0.01) decreased the induction of inducible IL-10(+)TGF-β(+) Treg. The responsible mechanism involved IFN-γ-driven T cell polarization towards Teff and suppression of Treg differentiation. In an in vitro model simulating the human tumor microenvironment, IRX-2 promoted Teff expansion and antitumor activity without inducing Treg. Thus, IRX-2 could be considered as a promising component of future antitumor therapies.