MDSCs and Tregs play an essential role in the immunosuppressive networks that contribute to tumor-immune evasion. The mechanisms by which tumors promote the expansion and/or function of these suppressive cells and the cross-talk between MDSC and Treg remain incompletely defined. Previous reports have suggested that MDSC may contribute to Treg induction in cancer. Herein, we provide evidence that tumor-induced gr-MDSCs, endowed with the potential of suppressing conventional T Lc, surprisingly impair TGF-β1-mediated generation of CD4(+)CD25(+)FoxP3(+) iTregs. Furthermore, gr-MDSCs impede the proliferation of nTregs without, however, affecting FoxP3 expression. Suppression of iTreg differentiation from naïve CD4(+) cells by gr-MDSC occurs early in the polarization process, requires inhibition of early T cell activation, and depends on ROS and IDO but does not require arginase 1, iNOS, NO, cystine/cysteine depletion, PD-1 and PD-L1 signaling, or COX-2. These findings thus indicate that gr-MDSCs from TB hosts have the unanticipated ability to restrict immunosuppressive Tregs.