Systemic inflammation (SI) plays a detrimental role in various conditions with high mortality rates1-4. SI manifests an acute hyperinflammation followed by long-lasting immunosuppression, increasing patients risks for secondary infections and impaired clinical outcomes5-7. Due to the extensive heterogeneity in SI etiology, the mechanisms governing these states are incompletely understood. Here, we characterized acute and late effects of lipopolysaccharide (LPS)-induced SI (LPS-SI8) on blood monocytes and bone marrow (BM) cells of healthy volunteers. Like clinical SI, LPS administration elicited a profound but transient acute response. Single-cell transcriptomic analysis of acute LPS-SI unveiled loss of BM monocytes and appearance of an inflammatory monocyte-like (i-Mono's) population, expressing gene programs similar to early-stage sepsis patients9. In the ensuing late phase of LPS-SI, we observed reduced expression of interferon type I (IFN-I) responsive genes in monocytes and profound attenuation of in vivo response to a second LPS challenge. Furthermore, late LPS-SI led to impaired myelopoiesis with a loss of intermediate and non-classical monocytes. In accordance, we show compromised myelopoiesis also occurs in late-stage sepsis. Finally, IFNb; treatment reversed LPS-induced immunosuppression in monocytes. Our results reveal long-lasting effects of SI on myelopoiesis and substantiate the importance of IFN-I in the pathophysiology of SI-induced immunosuppression.