Hepatocellular carcinoma (HCC), mostly developed in fibrotic/cirrhotic liver, exhibits relatively low responsiveness to immune checkpoint blockade (ICB) therapy. As myeloid-derived suppressor cell (MDSC) is pivotal for immunosuppression, we investigated its role and regulation in the fibrotic microenvironment with an aim of developing mechanism-based combination immunotherapy. Functional significance of MDSCs was evaluated by flow cytometry using two orthotopic HCC models in fibrotic liver setting via carbon tetrachloride or high-fat high-carbohydrate diet and verified by clinical specimens. Mechanistic studies were conducted in human hepatic stellate cell (HSC)-peripheral blood mononuclear cell culture systems and fibrotic-HCC patient-derived MDSCs. The efficacy of single or combined therapy with anti-programmed death-1-ligand-1 (anti-PD-L1) and a clinically trialled BET bromodomain inhibitor i-BET762 was determined. Accumulation of monocytic MDSCs (M-MDSCs), but not polymorphonuclear MDSCs, in fibrotic livers significantly correlated with reduced tumour-infiltrating lymphocytes (TILs) and increased tumorigenicity in both mouse models. In human HCCs, the tumour-surrounding fibrotic livers were markedly enriched with M-MDSC, with its surrogate marker CD33 significantly associated with aggressive tumour phenotypes and poor survival rates. Mechanistically, activated HSCs induced monocyte-intrinsic p38 MAPK signalling to trigger enhancer reprogramming for M-MDSC development and immunosuppression. Treatment with p38 MAPK inhibitor abrogated HSC-M-MDSC crosstalk to prevent HCC growth. Concomitant with patient-derived M-MDSC suppression by i-BET762, combined treatment with anti-PD-L1 synergistically enhanced TILs, resulting in tumour eradication and prolonged survival in the fibrotic-HCC mouse model. Our results signify how non-tumour-intrinsic properties in the desmoplastic microenvironment can be exploited to reinstate immunosurveillance, providing readily translatable combination strategies to empower HCC immunotherapy.