Tyro3, Axl, Mer (TAM) receptor tyrosine kinases reduce inflammatory, innate immune responses. We demonstrate that tumor-secreted protein S (Pros1), a Mer/Tyro3 ligand, decreased macrophage M1 cytokine expression in vitro and in vivo. In contrast, tumor cells with CRISPR-based deletion of Pros1 failed to inhibit M1 polarization. Tumor cell-associated Pros1 action was abrogated in macrophages from Mer- and Tyro3- but not Axl-KO mice. In addition, several other murine and human tumor cell lines suppressed macrophage M1 cytokine expression induced by IFN-γ and LPS. Investigation of the suppressive pathway demonstrated a role for PTP1b complexing with Mer. Substantiating the role of PTP1b, M1 cytokine suppression was also lost in macrophages from PTP1b-KO mice. Mice bearing Pros1-deficient tumors showed increased innate and adaptive immune infiltration, as well as increased median survival. TAM activation can also inhibit TLR-mediated M1 polarization. Treatment with resiquimod, a TLR7/8 agonist, did not improve survival in mice bearing Pros1-secreting tumors but doubled survival for Pros1-deleted tumors. The tumor-derived Pros1 immune suppressive system, like PD-L1, was cytokine responsive, with IFN-γ inducing Pros1 transcription and secretion. Inhibition of Pros1/TAM interaction represents a potential novel strategy to block tumor-derived immune suppression.