Psoriasis vulgaris is an inflammatory skin disease caused by hyper-activated T-cells regulated by positive and negative mechanisms; while the former has been much studied, but the latter has not. We studied the regulatory mechanism mediated by myeloid-derived suppressor cells (MDSCs), especially having shown that MDSCs expanded in melanoma patients express DC-HIL, a critical mediator of T-cell suppressor function. We examined expansion of DC-HIL+ MDSCs in psoriasis and characterized their functional properties. Frequency of DC-HIL+ monocytic MDSCs (CD14+HLA-DRno/low) in blood and skin was markedly increased in psoriatic patients vs. healthy controls, but there was no statistically significant relationship with disease severity (PASI score). Blood DC-HIL+ MDSC levels in the untreated patients were significantly higher than the treated patients. Compared to melanoma-derived MDSCs, psoriatic MDSCs exhibited significantly reduced suppressor function, and were less dependent on DC-HIL, but capable of inhibiting proliferation and IFN-γ and IL-17 responses of autologous T-cells. Psoriatic MDSCs were functionally diverse among patients in their ability to suppress allogeneic T-cells and use of either IL-17/arginase I or IFN-γ/iNOS axis as suppressor mechanisms. Thus DC-HIL+ MDSCs are expanded in psoriasis patients, and their mechanistic heterogeneity and relative functional deficiency may contribute to the development of psoriasis.