Myeloid-derived suppressor cells (MDSCs) are immune suppressive cells that are hallmarks of human cancer. MDSCs inhibit cytotoxic T lymphocytes (CTLs) and NK cell functions to promote tumor immune escape and progression, and therefore are considered key targets in cancer immunotherapy. Recent studies determined a key role of the apoptosis pathways in tumor-induced MDSC homeostasis and it is known that ceramide plays a key role in regulation of mammalian cell apoptosis. In this study, we aimed to determine the efficacy and underlying molecular mechanism of ceramide in suppression of MDSCs. Treatment of tumor-bearing mice with LCL521, a lysosomotropic inhibitor of acid ceramidase, significantly decreased MDSC accumulation in vivo. Using a MDSC-like myeloid cell model, we determined that LCL521 targets lysosomes and increases total cellular C16 ceramide level. Although MDSC-like cells have functional apoptosis pathways, LCL521-induced MDSC death occurs in an apoptosis-and necroptosis-independent mechanism. LCL521 treatment resulted in an increase in the number of autophagic vesicles, heterolysosomes and swollen ERs. Finally, concomitant inhibition of cathepsin B and cathepsin D was required to significantly decrease LCL521-induced cell death. Our observations indicate that LCL521 targets lysosomes to activate cathepsin B and cathepsin D, resulting in interrupted autophagy and ER stress that culminates in MDSC death. Therefore, a ceramidase inhibitor is potentially an effective adjunct therapeutic agent for suppression of MDSCs to enhance the efficacy of CTL-based cancer immunotherapy.