Tumor infiltrating myeloid cells play contradictory roles in the tumor development. Dendritic cells and classical activated macrophages support anti-tumor immune activity via antigen presentation and induction of pro-inflammatory immune responses. Myeloid suppressor cells (MSCs), for instance myeloid derived suppressor cells (MDSCs) or tumor associated macrophages play a critical role in tumor growth. Here, treatment with sodium oleate, an unsaturated fatty acid, induced a regulatory phenotype in the myeloid suppressor cell line MSC-2 and resulted in an increased suppression of activated T cells, paralleled by increased intracellular lipid droplets formation. Furthermore, sodium oleate potentiated nitric oxide (NO) production in MSC-2, thereby increasing their suppressive capacity. In primary polarized bone marrow cells, sodium oleate (C18:1) and linoleate (C18:2), but not stearate (C18:0) were identified as potent FFA to induce a regulatory phenotype. This effect was abrogated in MSC-2 as well as primary cells by specific inhibition of droplets formation while the inhibition of de novo FFA synthesis proved ineffective, suggesting a critical role for exogenous FFA in the functional induction of MSCs. Taken together our data introduce a new unsaturated fatty acid-dependent pathway shaping the functional phenotype of MSCs, facilitating the tumor escape from the immune system.