Expression of surface NKG2D ligand MIC on tumor cells is deemed to stimulate NK and co-stimulate CD8 T cell anti-tumor immunity. Human cancer cells however frequently adopt a proteinase-mediated shedding strategy to generate soluble MIC (sMIC) to circumvent host immunity. High levels of sMIC have been shown to correlate with advanced disease stages in cancer patients. The underlying mechanism is currently understood as systemic downregulation of NKG2D expression on CD8 T and NK cells and perturbing NK cell periphery maintenance. Herein we report a novel mechanism by which sMIC poses immune suppressive effect on host immunity and tumor microenvironment. We demonstrate that sMIC facilitates expansion of myeloid-derived suppressor cells (MDSCs) and skews macrophages to the more immune suppressive alternative phenotype through activation of STAT3. These findings further endorse that sMIC is an important therapeutic target for cancer immunotherapy.