Recent studies suggest that tumor-infiltrated myeloid cells frequently up-regulate COX-2 expression and have enhanced PGE₂ metabolism. This may affect the maturation and immune function of tumor-infiltrated antigen-presenting cells. In vitro studies demonstrate that tumor-derived factors can skew GM-CSF-driven differentiation of T(h)1-oriented myeloid APCs into M2-oriented Ly6C(+)F4/80(+) MDSCs or Ly6C(-)F4/80(+) arginase-expressing macrophages. These changes enable myeloid cells to produce substantial amounts of IL-10, VEGF, and MIP-2. The tumor-mediated inhibition of APC differentiation was associated with the up-regulated expression of PGE₂-forming enzymes COX-2, mPGES1 in myeloid cells, and the simultaneous repression of PGE(2)-catabolizing enzyme 15-PGDH. The presence of tumor-derived factors also led to a reduced expression of PGT but promoted the up-regulation of MRP4, which works as a PGE₂ efflux receptor. Addition of COX-2 inhibitor to the BM cell cultures could prevent the tumor-induced skewing of myeloid cell differentiation, partially restoring cell phenotype and down-regulating the arginase expression in the myeloid APCs. Our study suggests that tumors impair the intracellular PGE(2) catabolism in myeloid cells through simultaneous stimulation of PGE(2)-forming enzymes and inhibition of PGE₂-degrading systems. This tumor-induced dichotomy drives the development of M2-oriented, arginase-expressing macrophages or the MDSC, which can be seen frequently among tumor-infiltrated myeloid cells.