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Myeloid-derived suppressor cells (MDSC) play an important role in tumor escape by suppressing T-cell responses. MDSC represent a group of cells of myeloid lineage at different stages of differentiation. Increased arginase activity and production of reactive oxygen species (ROS) are among the main functional characteristics of these cells. Recent studies have shown that all-trans retinoic acid (ATRA) had a potent activity in eliminating MDSC in cancer patients and in tumor-bearing mice. ATRA differentiates these cells into mature myeloid cells. However, the mechanism of this effect is unclear. Here, we have shown that ATRA dramatically and specifically upregulated gene expression and protein level of glutathione synthase (GSS) in MDSC. This resulted in accumulation of glutathione (GSH) in these cells, observed in both mice and cancer patients. Blockade of GSH synthesis cancelled the effect of ATRA on MDSC. Accumulation of GSH in these cells using N-acetyl-L-cysteine mimicked the effect of ATRA on MDSC differentiation. Analysis of potential mechanisms of ATRA effect on GSS revealed that ATRA regulates its expression not by directly binding to the promoter but primarily via activation of extracellular signal-regulated kinase 1/2. Thus, ATRA induced differentiation of MDSC primarily via neutralization of high ROS production in these cells. This novel mechanism involves specific up-regulation of GSS and accumulation of GSH and could be used in developing and monitoring therapeutic application of ATRA. [Cancer Res 2007;67(22):11021-8]