Maternal immune system tolerance to the semiallogeneic fetus is essential for a successful pregnancy; however, the mechanisms underlying this immunotolerance have not been fully elucidated. Here, we demonstrate that myeloid-derived suppressor cells play an important role in maintaining feto-maternal tolerance. A significant expansion of granulocytic myeloid-derived suppressor cells was observed in multiple immune organs and decidual tissues from pregnant mice. Pregnancy-derived granulocytic myeloid-derived suppressor cells suppressed T cell responses in a reactive oxygen species-dependent manner and required direct cell-cell contact. Mechanistic studies showed that progesterone facilitated differentiation and activation of granulocytic myeloid-derived suppressor cells, mediated through STAT3 signaling. The STAT3 inhibitor JSI-124 and a specific short hairpin RNA completely abrogated the effects of progesterone on granulocytic myeloid-derived suppressor cells. More importantly, granulocytic myeloid-derived suppressor cell depletion dramatically enhanced the abortion rate in normal pregnant mice, whereas adoptive transfer of granulocytic myeloid-derived suppressor cells clearly reduced the abortion rate in the CBA/J X DBA/2J mouse model of spontaneous abortion. These observations collectively demonstrate that granulocytic myeloid-derived suppressor cells play an essential role in the maintenance of fetal immunotolerance in mice. Furthermore, our study supports the notion that in addition to their well-recognized roles under pathologic conditions, myeloid-derived suppressor cells perform important functions under certain physiologic circumstances.