Smoking is an established risk factor for pancreatic cancer (PC), but late diagnosis limits the evaluation of its mechanistic role in the progression of PC. We used a well-established genetically engineered mouse model (LSL-K-rasG12D) of PC to elucidate the role of smoking during initiation and development of pancreatic intraepithelial neoplasia (PanIN). The 10-week-old floxed mice (K-rasG12D; Pdx-1cre) and their control unfloxed (LSL-K-rasG12D) littermates were exposed to cigarette smoke (total suspended particles: 150 mg/m3) for 20 weeks. Smoke exposure significantly accelerated the development of PanIN lesions in the floxed mice, which correlated with tenfold increase in the expression of cytokeratin19. The systemic accumulation of myeloid-derived suppressor cells (MDSCs) decreased significantly in floxed mice compared with unfloxed controls (P<0.01) after the smoke exposure with the concurrent increase in the macrophage (P<0.05) and dendritic cell (DCs) (P<0.01) population. Further, smoking-induced inflammation (IFN-γ, CXCL2; P<0.05) was accompanied by enhanced activation of pancreatic stellate cells and elevated levels of serum retinoic acid-binding protein 4, indicating increased bioavailability of retinoic acid which contributes to differentiation of MDSCs to tumor-associated macrophages (TAMs) and DCs. TAMs predominantly contribute to the increased expression of heparin-binding epidermal growth factor-like growth factor (EGFR ligand) in pre-neoplastic lesions in smoke-exposed floxed mice that facilitate acinar-to-ductal metaplasia (ADM). Further, smoke exposure also resulted in partial suppression of the immune system early during PC progression. Overall, the present study provides a novel mechanism of smoking-induced increase in ADM in the presence of constitutively active K-ras mutation.