Myeloid-derived suppressor cells (MDSCs) are a heterogeneous population of immature myeloid cells which accumulate in cancer, infection and chronic inflammation. These cells suppress T-cell function and the immune response. Angiotensin-converting enzyme (ACE) is a peptidase that is now known to regulate aspects of myelopoiesis. Here, we show that ACE expression correlates with myeloid maturation in vitro. Forced ACE overexpression in monocytic cells reduces the generation of MDSCs. In vivo, mice with a genetic change resulting in myeloid cell ACE overexpression have reduced numbers of blood and splenic MDSCs in a tumor model and in a model of chronic inflammation induced by complete Freund's adjuvant. In contrast, ACE-null mice produce large numbers of MDSCs during chronic inflammation. Macrophages from mice with myeloid ACE overexpressing are more pro-inflammatory and have more tumor-killing activity than cells from wild-type mice. Thus, manipulating myeloid ACE activity can interfere with MDSC development and the maturation of myeloid cells.