Background Regulatory T cells (Tregs) may represent a major cellular mechanism in immune suppression by dampening the anti-tumor response in malignant pleural effusion (MPE). Tumor necrosis factor receptor type II (TNFR2) has emerged as a novel identification for the maximally suppressive subset of Tregs in the tumor environment. At present, the significance of TNFR2 expression on Tregs in MPE remains unclear. Methods The distribution of TNFR2+cells in Tregs and effector T cells (Teffs) in MPE, peripheral blood (PB), and tuberculosis pleural effusion (TPE) were determined. The associations between TNFR2+Tregs frequencies present in MPE and the clinical and laboratorial characteristics of patients with lung cancer were investigated. The immunosuppressive phenotype of TNFR2+Tregs in MPE was analyzed. The effects of the TNF-TNFR2 interaction on the immunosuppressive function of Tregs was explored. The efficacy of targeting TNFR2 for MPE therapy was examined. The source of TNF in MPE was identified. Results We observed that markedly higher levels of TNFR2 were expressed in MPE Tregs compared with the levels expressed in MPE Teffs, PB Tregs, or in TPE Tregs. The frequencies of TNFR2+Tregs were positively correlated with the number of tumor cells in MPE, as well as the volume of MPE. High frequencies of TNFR2+Tregs in MPE indicated short survival time and poor performance status for MPE patients. Compared to TNFR2-Tregs, TNFR2+Tregs expressed higher levels of immunosuppressive molecules cytotoxic T lymphocyte-associated protein 4 (CTLA-4), programmed cell death-ligand 1 (PD-L1), and replicating marker Ki-67. Consequently, the proportions of interferon gamma (IFN-γ)-producing cytotoxic T lymphocytes (CTLs) were significantly increased after TNFR2 blockade. Furthermore, tumor necrosis factor (TNF), through interaction with TNFR2, enhanced the suppressive capacity of Tregs by up-regulating CTLA-4 and PD-L1 expression. Interestingly, T helper 1 (Th1) and T helper 17 (Th17) cells are the major source of TNF in MPE, suggesting that MPE Teffs may paradoxically promote tumor growth by boosting MPE Treg activity via the TNF-TNFR2 pathway. Conclusions Our data expanded the immunosuppressive mechanism present in MPE induced by Tregs, and provides novel insight for the diagnosis, disease evaluation, and treatment of MPE patients.