Myeloid cells play a key role in the outcome of anti-tumor immunity and response to anti-cancer therapy, since in the tumor microenvironment they may exert both stimulatory and inhibitory pressures on the proliferative, angiogenic, metastatic, and immunomodulating potential of tumor cells. Therefore, understanding the mechanisms of myeloid regulatory cell differentiation is critical for developing strategies for the therapeutic reversal of myeloid derived suppressor cell (MDSC) accumulation in the tumor-bearing hosts. Here, using an in vitro model system, several potential mechanisms of the direct effect of paclitaxel on MDSC were tested, which might be responsible for the anti-tumor potential of low-dose paclitaxel therapy in mice. It was hypothesized that a decreased level of MDSC in vivo after paclitaxel administration might be due to (i) the blockage of MDSC generation, (ii) an induction of MDSC apoptosis, or (iii) the stimulation of MDSC differentiation. The results revealed that paclitaxel in ultra-low concentrations neither increased MDSC apoptosis nor blocked MDSC generation, but stimulated MDSC differentiation towards dendritic cells. This effect of paclitaxel was TLR4-independent since it was not diminished in cell cultures originated from TLR4-/- mice. These results support a new concept that certain chemotherapeutic agents in ultra-low non-cytotoxic doses may suppress tumor progression by targeting several cell populations in the tumor microenvironment, including MDSC.