Human T cells genetically modified to express chimeric antigen receptors (CAR) specific to the B cell tumor antigen CD19 can successfully eradicate systemic human CD19(+) tumors in immunocompromised SCID (severe combined immunodeficient)-Beige mice. However, in the clinical setting, CD4(+) CD25(hi) T regulatory cells (Treg) present within the tumor microenvironment may be potent suppressors of tumor-targeted effector T cells. In order to assess the impact of Tregs on CAR-modified T cells in the SCID-Beige xenotransplant model, we isolated, genetically targeted and expanded natural T regulatory cells (nTreg). In vitro nTregs modified to express CD19-targeted CARs efficiently inhibited the proliferation of activated human T cells, as well as the capacity of CD19-targeted 19-28z(+) effector T cells to lyse CD19(+) Raji tumor cells. Intravenous infusion of CD19-targeted nTregs into SCID-Beige mice with systemic Raji tumors traffic to sites of tumor and recapitulate a clinically relevant hostile tumor microenvironment. Antitumor efficacy of subsequently infused 19-28z(+) effector T cells was fully abrogated as assessed by long-term survival of treated mice. Optimal suppression by genetically targeted nTregs was dependent on nTreg to effector T-cell ratios and in vivo nTreg activation. Prior infusion of cyclophosphamide in the setting of this nTreg-mediated hostile microenvironment was able to restore the antitumor activity of subsequently infused 19-28z(+) effector T cells through the eradication of tumor-targeted nTregs. These findings have significant implications for the design of future clinical trials utilizing CAR-based adoptive T-cell therapies of cancer.