Inducible NO synthase (iNOS) is a hallmark of chronic inflammation that is also overexpressed in melanoma and other cancers. Whereas iNOS is a known effector of myeloid-derived suppressor cell (MDSC)-mediated immunosuppression, its pivotal position at the interface of inflammation and cancer also makes it an attractive candidate regulator of MDSC recruitment. We hypothesized that tumor-expressed iNOS controls MDSC accumulation and acquisition of suppressive activity in melanoma. CD11b(+)GR1(+) MDSC derived from mouse bone marrow cells cultured in the presence of MT-RET-1 mouse melanoma cells or conditioned supernatants expressed STAT3 and reactive oxygen species (ROS) and efficiently suppressed T cell proliferation. Inhibition of tumor-expressed iNOS with the small molecule inhibitor L-NIL blocked accumulation of STAT3/ROS-expressing MDSC, and abolished their suppressive function. Experiments with vascular endothelial growth factor (VEGF)-depleting Ab and recombinant VEGF identified a key role for VEGF in the iNOS-dependent induction of MDSC. These findings were further validated in mice bearing transplantable MT-RET-1 melanoma, in which L-NIL normalized elevated serum VEGF levels; downregulated activated STAT3 and ROS production in MDSC; and reversed tumor-mediated immunosuppression. These beneficial effects were not observed in iNOS knockout mice, suggesting L-NIL acts primarily on tumor- rather than host-expressed iNOS to regulate MDSC function. A significant decrease in tumor growth and a trend toward increased tumor-infiltrating CD8(+) T cells were also observed in MT-RET transgenic mice bearing spontaneous tumors. These data suggest a critical role for tumor-expressed iNOS in the recruitment and induction of functional MDSC by modulation of tumor VEGF secretion and upregulation of STAT3 and ROS in MDSC.