Infections are a leading cause of perinatal morbidity and mortality. The outstandingly high susceptibility to infections early in life is mainly attributable to the compromised state of the neonatal immune system. One important difference to the adult immune system is a bias towards T helper type 2 (Th2) responses in newborns. However, mechanisms regulating neonatal T‐cell responses are incompletely understood. Granulocytic myeloid‐derived suppressor cells (GR‐MDSC) are myeloid cells with a granulocytic phenotype that suppress various functions of other immune cells and accumulate under physiological conditions during pregnancy in maternal and fetal blood. Although it has been hypothesized that GR‐MDSC accumulation during fetal life could be important for the maintenance of maternal–fetal tolerance, the influence of GR‐MDSC on the immunological phenotype of neonates is still unclear. Here, we investigated the impact of GR‐MDSC isolated from cord blood (CB‐MDSC) on the polarization of Th cells. We demonstrate that CB‐MDSC inhibit Th1 responses and induced Th2 responses and regulatory T (Treg) cells. Th1 inhibition was cell‐contact dependent and occurred independent of other cell types, while Th2 induction was mediated independently of cell contact through expression of ArgI and reactive oxygen species by CB‐MDSC and partially needed the presence of monocytes. Treg cell induction by CB‐MDSC also occurred cell‐contact independently but was partially mediated through inducible nitric oxide synthase. These results point towards a role of MDSC in regulating neonatal immune responses. Targeting MDSC function in neonates could be a therapeutic opportunity to improve neonatal host defence.