AbstractMyeloid-derived suppressor cells (MDSCs) possess immunosuppressive activities, which allow cancers to escape immune surveillance and become non-responsive to immune checkpoints blockade. Here we report hypoxia as a cause of MDSC accumulation. Using hepatocellular carcinoma (HCC) as a cancer model, we show that hypoxia, through stabilization of hypoxia-inducible factor-1 (HIF-1), induces ectoenzyme, ectonucleoside triphosphate diphosphohydrolase 2 (ENTPD2/CD39L1), in cancer cells, causing its overexpression in HCC clinical specimens. Overexpression of ENTPD2 is found as a poor prognostic indicator for HCC. Mechanistically, we demonstrate that ENTPD2 converts extracellular ATP to 5′-AMP, which prevents the differentiation of MDSCs and therefore promotes the maintenance of MDSCs. We further find that ENTPD2 inhibition is able to mitigate cancer growth and enhance the efficiency and efficacy of immune checkpoint inhibitors. Our data suggest that ENTPD2 may be a good prognostic marker and therapeutic target for cancer patients, especially those receiving immune therapy.