Local environmental factors influence CD8⁺ T cell priming in lymph nodes (LNs). Here, we sought to understand how factors unique to the tumor-draining mediastinal LN (mLN) impact CD8⁺ T cell responses toward lung cancer. Type 1 conventional dendritic cells (DC1s) showed a mLN-specific failure to induce robust cytotoxic T cells responses. Using regulatory T (Treg) cell depletion strategies, we found that Treg cells suppressed DC1s in a spatially coordinated manner within tissue-specific microniches within the mLN. Treg cell suppression required MHC II-dependent contact between DC1s and Treg cells. Elevated levels of IFN-γ drove differentiation Treg cells into Th1-like effector Treg cells in the mLN. In patients with cancer, Treg cell Th1 polarization, but not CD8⁺/Treg cell ratios, correlated with poor responses to checkpoint blockade immunotherapy. Thus, IFN-γ in the mLN skews Treg cells to be Th1-like effector Treg cells, driving their close interaction with DC1s and subsequent suppression of cytotoxic T cell responses.