The intestine-specific homeobox transcription factor intestine-specific homeobox (ISX) is an IL6-inducible proto-oncogene implicated in the development of hepatocellular carcinoma, but its mechanistic contributions to this process are undefined. In this study, we provide evidence that ISX mediates a positive feedback loop integrating inflammation, tryptophan catabolism, and immune suppression. We found that ISX-mediated IL6-induced expression of the tryptophan catabolic enzymes Indoleamine 2,3-dioxygenase 1 (IDO1) and tryptophan 2,3-dioxygenase in hepatocellular carcinoma cells, resulting in an ISX-dependent increase in the tryptophan catabolite kynurenine and its receptor aryl hydrocarbon receptor (AHR). Activation of this kynurenine/AHR signaling axis acted through a positive feedback mechanism to increase ISX expression and enhance cellular proliferation and tumorigenic potential. RNAi-mediated attenuation of ISX or AHR reversed these effects. In an IDO1-dependent manner, ectopic expression of ISX induced expression of genes encoding the critical immune modulators CD86 (B7-2) and programmed death ligand-1 (PD-L1), through which ISX conferred a significant suppressive effect on the CD8⁺ T-cell response. In hepatocellular carcinoma specimens, expression of IDO1, kynurenine, AHR, and PD-L1 correlated negatively with survival. Overall, our results identified a feed-forward mechanism of immune suppression in hepatocellular carcinoma organized by ISX, which involves kynurenine-AHR signaling and PD-L1, offering insights into immune escape by hepatocellular carcinoma, which may improve its therapeutic management. Cancer Res; 77(15); 4065–77. ©2017 AACR.