A major limitation to improved outcomes in acute myelogenous leukemia (AML) is relapse resulting from leukemic cells that persist at clinical remission. Regulatory T cells (Tregs), which are increased in AML patients, can contribute to immune evasion by residual leukemic cells. Tumor necrosis factor (TNF), a pro-inflammatory cytokine present at high levels within patients, can induce TNF receptor-2 (TNFR2) expression on Tregs. We hypothesized that since TNFR2 is required for Treg stabilization and TNFR2+ Tregs are potent suppressors, targeting TNFR2+ Tregs may restore the effectiveness of immune-surveillance mechanisms. In this pilot study, we report AML patients in clinical remission have substantially increased levels of TNFR2+ T cells, including TNFR2+ Tregs and impaired effector CD4 T cell function with reduced IL-2 and IFNγ production. The immunomodulatory drug, lenalidomide, and the demethylating agent, azacitidine have been moderately successful in treating AML patients, but their combined effects on TNFR2+ T cells, including Tregs are currently unknown. Our data indicates that although treatment with lenalidomide and azacitidine increased cytokine production by effector T cells in all patients, durable clinical remissions may be observed in patients with a concomitant reduction in TNFR2+ T cells and TNFR2+ Tregs. In vitro studies further demonstrated that lenalidomide can reduce TNFR2 expression and can augment effector cytokine production by T cells, which can be further enhanced by azacitidine. These results indicate that reduction of TNFR2+ T cells in AML postremission phase may result from combined azacitidine/lenalidomide therapy and may contribute to an improved clinical outcome. Am. J. Hematol. 89:795–802, 2014. © 2014 Wiley Periodicals, Inc.