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Background: Myeloid-derived suppressor cells (MDSCs) are one of the major components of the immune-suppressive network, play key roles in tumor progression and limit therapeutic responses. Recently, we reported that tumor spheres formed by breast cancer cell lines were visibly smaller in a Th1 enriched microenvironment with significantly reduced differentiation of MDSC populations in 3D culture. In this study, we investigated the mechanism(s) of bispecific antibody armed ATC mediated inhibition of MDSC in the presence or absence of Th1 microenvironment. Methods: We used 3D co-culture model of peripheral blood mononuclear cells (PBMC) with pancreatic cancer cells MiaPaCa-2 [MiaE] and gemcitabine resistant MiaPaCa-GR [MiaM] cells to generate MDSC in the presence or absence of Th1 cytokines and EGFRBi armed ATC (aATC). Results: We show significantly decreased differentiation of MDSC (MiaE, p<0.005; MiaM, p<0.05) in the presence of aATC with or without Th1 cytokines. MDSC recovered from control cultures (without aATC) showed potent ability to suppress T cell functions compared to those recovered from aATC containing co-cultures. Reduced accumulation of MDSC was accompanied by significantly lower levels of COX2 (p<0.0048), PGE2 (p<0.03), and their downstream effector molecule Arginase-1 (p<0.01), and significantly higher levels of TNF-a, IL-12 and chemokines CCL3, CCL4, CCL5, CXCL9 and CXCL10 under aATC induced Th1 cytokine enriched microenvironment Conclusions: These data suggest aATC can suppress MDSC differentiation and attenuation of their suppressive activity through down regulation of COX2, PGE2 and ARG1 pathway that is potentiated in presence of Th1 cytokines, suggesting that Th1 enriching immunotherapy may be beneficial in pancreatic cancer treatment. [ABSTRACT FROM AUTHOR]