We have studied the effects of host-derived Interleukin-1β (IL-1β) on breast cancer progression, using 4T1 tumor model. Cells were injected orthotopically into IL-1b KO mice and their wild-type (WT) counterparts. During the first two weeks, tumors in both WT and IL-1b KO mice developed similarly, whereas later, deficiency of microenvironmental IL-1b leads to complete tumor regression, which is CD8+ T cell dependent. This response is impaired in WT mice, where accumulation of monocytic myeloid suppressor cells MDSC (M-MDSC), dependent on monocyte chemotactic protein 1 (MCP-1), was more abundant than in mice with IL-1β deficiency. Host-derived IL-1b at the tumor site directs M-MDSC differentiation to tumor promoting antigen presenting cells (APCs), while in IL-1b KO mice, M-MDSCs differentiate into LY6ClowCCR2‑ myeloid cells. Overall, the results demonstrate that IL-1β is an important factor in recruitment and differentiation of myeloid cells and plays a crucial role in determining the balance between immunity and inflammation.