Oncolytic virotherapy is an innovative approach for cancer treatment. However, recruitment of myeloid derived suppressor cells (MDSC) into the tumor microenvironment (TME) after oncolysis-mediated local inflammation leads to tumor resistance to the therapy. Using the murine malignant mesothelioma model, we demonstrated that the in-situ vaccinia virotherapy recruited primarily polymorphonuclear MDSC (PMN-MDSC) into the TME where they exhibited strong suppression of cytotoxic T lymphocytes (CTL) in a reactive oxygen species (ROS)-dependent way. Single-cell RNA sequencing analysis confirmed the suppressive profile of PMN-MDSC at the transcriptomic level and identified CXCR2 as a therapeutic target expressed on PMN-MDSC. Abrogating PMN-MDSC trafficking by CXCR2-specific small molecule inhibitor during the vaccinia virotherapy exhibited enhanced antitumor efficacy in three syngeneic cancer models, through increasing CD8+/MDSC ratios in the TME, activating CTL and skewing suppressive TME into an antitumor environment. Our results warrant clinical development of CXCR2 inhibitor in combination with oncolytic virotherapy. Keywords: CTL; CXCR2; MDSC; cancer immunotherapy; immunosuppression; inflammation; oncolytic virotherapy; vaccinia virus.