A causative relationship between chronic inflammation and cancer has been postulated for many years, and clinical observations and laboratory experiments support the hypothesis that inflammation contributes to tumor onset and progression. However, the precise mechanisms underlying the relationship are not known. We recently reported that the proinflammatory cytokine, interleukin-1β, induces the accumulation and retention of myeloid-derived suppressor cells (MDSC), which are commonly found in many patients and experimental animals with cancer and are potent suppressors of adaptive and innate immunity. This finding led us to hypothesize that inflammation leads to cancer through the induction of MDSC, which inhibit immunosurveillance and thereby allow the unchecked persistence and proliferation of premalignant and malignant cells. We now report that host MDSC have receptors for prostaglandin E2 (PGE2) and that E-prostanoid receptor agonists, including PGE2, induce the differentiation of Gr1⁺CD11b⁺ MDSC from bone marrow stem cells, whereas receptor antagonists block differentiation. BALB/c EP2 knockout mice inoculated with the spontaneously metastatic BALB/c-derived 4T1 mammary carcinoma have delayed tumor growth and reduced numbers of MDSC relative to wild-type mice, suggesting that PGE2 partially mediates MDSC induction through the EP2 receptor. Treatment of 4T1-tumor–bearing wild-type mice with the cyclooxygenase 2 inhibitor, SC58236, delays primary tumor growth and reduces MDSC accumulation, further showing that PGE2 induces MDSC and providing a therapeutic approach for reducing this tumor-promoting cell population. [Cancer Res 2007;67(9):4507–13]