Inducible nitric oxide synthase (iNOS) generates nitric oxide (NO) in myeloid cells that acts as a defense mechanism to suppress invading microorganisms or neoplastic cells. In tumor-bearing mice, elevated iNOS expression is a hallmark of myeloid-derived suppressor cells (MDSC). MDSCs use NO to nitrate both the T cell receptor and STAT1, thus inhibiting T cell activation and the anti-tumor immune response. The molecular mechanisms underlying iNOS expression and regulation in tumor-induced MDSCs are unknown. We report here that deficiency in IRF8 results in diminished iNOS expression in both mature CD11b+Gr1− and immature CD11b+Gr1+ myeloid cells in vivo. Strikingly, although IRF8 was silenced in tumor-induced MDSC, iNOS expression was significantly elevated in tumor-induced MDSC, suggesting that the expression of iNOS is regulated by an IRF8-independent mechanism under pathological conditions. Furthermore, tumor-induced MDSC exhibited diminished STAT1 and NF-κB Rel protein levels, the essential inducers of iNOS in myeloid cells. Instead, tumor-induced MDSC showed increased SETD1B expression as compared to their cellular equivalents in tumor-free mice. Chromatin immunoprecipitation revealed that H3K4me3, the target of SETD1B, was enriched at the nos2 promoter in tumor-induced MDSC, and inhibition or silencing of SETD1B diminished iNOS expression in tumor-induced MDSC. Our results show how tumor cells use the SETD1B-H3K4me3 epigenetic axis to bypass a normal role for IRF8 expression in activating iNOS expression in MDSC, when they are generated under pathological conditions.