Myeloid-derived suppressor cells (MDSCs) inhibit T cell responses and are relevant to cancer, autoimmunity and transplant biology. Anti-thymocyte globulin (ATG) is a commonly used T cell depletion agent, yet the effect of ATG on MDSCs has not been investigated. MDSCs were generated in Lewis Lung Carcinoma 1 tumor-bearing mice. MDSC development and function were assessed in vivo and in vitro with and without ATG administration. T cell suppression assays, RT-PCR, flow cytometry and arginase activity assays were used to assess MDSC phenotype and function. MDSCs increased dramatically in tumor-bearing mice and the majority of splenic MDSCs were of the polymorphonuclear subset. MDSCs potently suppressed T cell proliferation. ATG-treated mice developed 50% fewer MDSCs and these MDSCs were significantly less suppressive of T cell proliferation. In vitro, ATG directly bound 99.6% of MDSCs. CCR7, L-selectin and LFA-1 were expressed by both T cells and MDSCs, and binding of LFA-1 was inhibited by ATG pre-treatment. Arg-1 and PD-L1 transcript expression were reduced 30–40% and arginase activity decreased in ATG-pretreated MDSCs. MDSCs were bound and functionally inhibited by ATG. T cells and MDSCs expressed common Ags which were also targets of ATG. ATG may be helpful in tumor models seeking to suppress MDSCs. Alternatively, ATG may inadvertently inhibit important T cell regulatory events in autoimmunity and transplantation.