Contagious cancers that pass between individuals as an infectious cell line are highly unusual pathogens. Devil facial tumor disease (DFTD) is one such contagious cancer that emerged 16 y ago and is driving the Tasmanian devil to extinction. As both a pathogen and an allograft, DFTD cells should be rejected by the host-immune response, yet DFTD causes 100% mortality among infected devils with no apparent rejection of tumor cells. Why DFTD cells are not rejected has been a question of considerable confusion. Here, we show that DFTD cells do not express cell surface MHC molecules in vitro or in vivo, due to down-regulation of genes essential to the antigen-processing pathway, such as β2-microglobulin and transporters associated with antigen processing. Loss of gene expression is not due to structural mutations, but to regulatory changes including epigenetic deacetylation of histones. Consequently, MHC class I molecules can be restored to the surface of DFTD cells in vitro by using recombinant devil IFN-γ, which is associated with up-regulation of the MHC class II transactivator, a key transcription factor with deacetylase activity. Further, expression of MHC class I molecules by DFTD cells can occur in vivo during lymphocyte infiltration. These results explain why T cells do not target DFTD cells. We propose that MHC-positive or epigenetically modified DFTD cells may provide a vaccine to DFTD. In addition, we suggest that down-regulation of MHC molecules using regulatory mechanisms allows evolvability of transmissible cancers and could affect the evolutionary trajectory of DFTD.