Amino acid catabolism causing nutritional stress has emerged as a key immune escape mechanism in cancer to suppress tumour-specific lymphocytes. Here, we show that Arginase-2, the enzyme that breaks down arginine, is released in the blood of acute myeloid leukaemia (AML) patients and mouse models to deplete systemic arginine and inhibit T-cell proliferation and effector function, effects that are abrogated by use of Arginase inhibitors. Importantly, we reveal that the genetic reprogramming in response to arginine starvation differs between cancer cells and activated T-cells in a way that only cancer cells continue to proliferate in the absence of arginine by taking up and converting citrulline to arginine. This dichotomy is accounted for by the cancer-specific ability to upregulate ASS1, the enzyme controlling conversion of citrulline to arginine. ASS1 knockdown in cancer cells completely abrogates proliferation in arginine-free conditions. Furthermore, we show that ASS1 upregulation is regulated by the transcription factor ATF4, which binds an internal enhancer in the ASS1 locus, along with its partner CEBPβ. ATF4/CEBPβ binding at this enhancer is high in cancer cells and augmented further upon amino acid depletion, whereas it is absent in T-cells. This discrepancy is explained by the presence of DNA methylation, H3K27me3 and H3K9me2/3, epigenetic modifications that create repressive chromatin at the ASS1 enhancer in T-cells but not cancer cells. ATF4 knockdown or deletion of the ATF4-binding site in the ASS1 enhancer abolishes the proliferative advantage displayed by cancer cells in arginine-free conditions. Finally, we reveal the citrulline transporters used by cancer cells and confirm that our findings are clinically relevant since, compared to healthy controls, AML patients have higher serum citrulline levels and possess leukaemic blasts with greater ASS1 and ATF4 expression. In conclusion, we identify arginine metabolism as a cancer immune evasion strategy and elucidate the adaptive mechanisms by which cancer cells, but not T-cells, resist arginine depletion in the tumour microenvironment. Our findings identify the epigenetic basis of a clinically relevant phenotype and reveal potential targets for cancer immunotherapy.