Fibrocytes are hematopoietic stem cell-derived fibroblast precursors that are implicated in chronic inflammation, fibrosis, and wound healing. Myeloid-derived suppressor cells (MDSCs) expand in cancer-bearing hosts and contribute to tumor immune evasion. They are typically described as CD11b⁺HLA-DR⁻ in humans. We report abnormal expansions of CD11b⁺HLA-DR⁺ myeloid cells in peripheral blood mononuclear fractions of subjects with metastatic pediatric sarcomas. Like classical fibrocytes, they display cell surface α smooth muscle actin, collagen I/V, and mediate angiogenesis. However, classical fibrocytes serve as antigen presenters and augment immune reactivity, whereas fibrocytes from cancer subjects suppressed anti-CD3-mediated T-cell proliferation, primarily via indoleamine oxidase (IDO). The degree of fibrocyte expansion observed in individual subjects directly correlated with the frequency of circulating GATA3⁺CD4⁺ cells (R = 0.80) and monocytes from healthy donors cultured with IL-4 differentiated into fibrocytes with the same phenotypic profile and immunosuppressive properties as those observed in patients with cancer. We thus describe a novel subset of cancer-induced myeloid-derived suppressor cells, which bear the phenotypic and functional hallmarks of fibrocytes but mediate immune suppression. These cells are likely expanded in response to Th2 immune deviation and may contribute to tumor progression via both immune evasion and angiogenesis.