Immunoregulatory Arginase-1 (Arg-1) is present in the tumor microenvironment of solid tumors. Its association to clinicopathology and its prognostic impact are inconsistent among different tumor types and biological fluids. This study evaluated Arg-1 protein levels in tumors and the circulation of patients with head and neck squamous cell carcinoma (HNSCC) in relation to clinical stage and prognosis. Tumor Arg-1 expression was monitored via immunohistochemistry while plasma Arg-1 levels via ELISA in 37 HNSCC patients. Arg-1 presence in plasma-derived exosomes was assessed using Western blots in 20 HNSCC patients. High tumor Arg-1 expression correlated with favorable clinicopathology and longer recurrence-free survival (RFS), while high plasma Arg-1 levels were associated with unfavorable clinicopathology. All patients with low tumor and high plasma Arg-1 had nodal metastases and developed recurrence. This discrepancy was attributed to the presence of Arg-1-carrying exosomes. Arg-1 was found in plasma-derived exosomes from all HNSCC patients. High exosomal Arg-1 levels were associated with positive lymph nodes and short RFS. Circulating Arg-1+ exosomes represent a mechanism of active Arg-1 export from the tumor to the periphery. Exosomes reflected biologically relevant Arg-1 levels in metastatic HNSCC and emerged as potentially more accurate biomarkers of metastatic disease and RFS than tissue or plasma Arg-1 levels.