Increased disease susceptibility during early life has been linked to immune immaturity, regulatory T-cell/TH2 immune biasing and hyporesponsiveness. The contribution of myeloid derived suppressor cells (MDSCs) remains uninvestigated. Here, we assessed peripheral MDSC in HIV-infected and -uninfected children with tuberculosis (TB) disease before, during and after TB treatment, along with matched household contacts (HHCs), HIV-exposed, -infected and -uninfected children without recent TB exposure. Serum analytes and enzymes associated with MDSC accumulation/activation/function were measured by colorimetric- and fluorescence arrays. Peripheral frequencies of cells phenotypically resembling MDSCs were significantly increased in HIV-exposed uninfected (HEU) and M.tb-infected children, but peaked in children with TB disease and remained high following treatment. MDSC in HIV-infected (HI) children were similar to unexposed uninfected controls; however, HAART-mediated MDSC restoration to control levels could not be disregarded. Increased MDSC frequencies in HHC coincided with enhanced indoleamine-pyrrole-2,3-dioxygenase (IDO), whereas increased MDSC in TB cases were linked to heightened IDO and arginase-1. Increased MDSC were paralleled by reduced plasma IP-10 and thrombospondin-2 levels in HEU and significantly increased plasma IL-6 in HI HHC. Current investigations into MDSC-targeted treatment strategies, together with functional analyses of MDSCs, could endorse these cells as novel innate immune regulatory mechanism of infant HIV/TB susceptibility.