Tumor-stroma interactions contribute to tumorigenesis. Tumor cells can educate the stroma at primary and distant sites to facilitate the recruitment of heterogeneous populations of immature myeloid cells, known as myeloid-derived suppressor cells (MDSCs). MDSCs suppress T cell responses and promote tumor proliferation. One outstanding question is how the local and distant stroma modulate MDSCs during tumor progression. Down-regulation of ß-catenin is critical for MDSC accumulation and immune suppressive functions in mice and humans. Here, we demonstrate that stroma-derived Dickkopf-1 (Dkk1) targets ß-catenin in MDSCs, thus exerting immune suppressive effects during tumor progression. Mice bearing extraskeletal tumors show significantly elevated levels of Dkk1 in bone microenvironment relative to tumor site. Strikingly, Dkk1 neutralization decreases tumor growth and MDSC numbers by rescuing ß-catenin in these cells and restores T cell recruitment at the tumor site. Recombinant Dkk1 suppresses ß-catenin target genes in MDSCs from mice and humans and anti-Dkk1 loses its antitumor effects in mice lacking ß-catenin in myeloid cells or after depletion of MDSCs, demonstrating that Dkk1 directly targets MDSCs. Furthermore, we find a correlation between CD15+ myeloid cells and Dkk1 in pancreatic cancer patients. We establish a novel immunomodulatory role for Dkk1 in regulating tumor-induced immune suppression via targeting ß-catenin in MDSCs.