Kupffer cells represent the first line of defense against tumor cells in the liver. Myeloid-derived suppressor cells (MDSC) have recently been observed in the liver parenchyma of tumor-bearing animals. The present study investigates the function of the MDSC subsets, and their impact on Kupffer cell phenotype and function. RIL-175 mouse hepatocellular carcinoma (HCC) cells were injected into the median liver lobe of C57BL/6 mice. Three weeks later, the median lobe hosting the tumor nodule was removed, and Kupffer cells and MDSCs were sorted from the remaining liver. Mouse livers devoid of HCC served as control. Kupffer cells expressed less co-stimulatory CD86 and MHCII and more co-inhibitory CD274 molecules in HCC-bearing livers than in control livers. Corresponding to this phenotype, Kupffer cells from HCC-bearing mice were less efficient in their function as antigen-presenting cells. Three CD11b(+) cell populations were identified and sorted from HCC-bearing mice. These cells had various phenotypes with different levels of MDSC-specific surface markers (Ly6G(high) cells, Gr1(high) cells, and Ly6C(low) cells), and may be considered as bonafide MDSCs given their suppression of antigen-specific T cell proliferation. Primary isolated Kupffer cells in co-culture with the three MDSC subsets showed a decrease in CCL2 and IL-18 secretion, and an increase in IL-10 and IL-1β secretion, and an increased expression of CD86, CD274, and MHCII. In conclusion, these data demonstrated the existence of three MDSC subsets in HCC-bearing animals. These cells altered Kupffer cell function and may decrease the migration and activation of anticancer effector cells in the liver.