Immune dysfunction may contribute to tumor progression in gastric cancer (GC) patients. One mechanism of immune dysfunction is the suppression of T cell activation and impairment of the efficacy of cancer immunotherapy by myeloid-derived suppressor cells (MDSCs). We assessed the phenotype and immunosuppressive function of MDSCs in GC patients. We further investigated the role of S100A8/A9 in GC and the relationship between S100A8/A9 and MDSC function. Lastly, the effect of MDSCs on survival rates and its potential as a prognostic factor in GC patients were investigated. MDSCs from PBMCs of GC patients were identified by comparing the expression of specific surface markers with PBMCs from healthy individuals. The ability of MDSCs to suppress T lymphocyte response and the effect of S100A8/A9 and RAGE blocking were tested in vitro by (autologous) MLR. GC patients had significantly more MDSCs than healthy individuals. These MDSCs suppressed both T lymphocyte proliferation and IFN-γ production and had high arginase-I expression. Levels of S100A8/A9 in plasma were higher in GC patients compared with healthy individuals, and they correlated with MDSC levels in the blood. Blocking of S100A8/A9 itself and the S100A8/A9 receptor RAGE on MDSCs from GC patients abrogated T cell effector function. We found that high levels of MDSCs correlated with more advanced cancer stage and with reduced survival (p = 0.006). S100A8/A9 has been identified as a potential target to modulate antitumor immunity by reversing MDSC-mediated immunosuppression.