Suppression of the host’s immune system plays a major role in cancer progression. Tumor signaling of programmed death 1 (PD1) on T cells and expansion of myeloid-derived suppressor cells (MDSCs) are major mechanisms of tumor immune escape. We sought to target these pathways in rhabdomyosarcoma (RMS), the most common soft tissue sarcoma of childhood. Murine RMS showed high surface expression of PD-L1, and anti-PD1 prevented tumor growth if initiated early after tumor inoculation; however, delayed anti-PD1 had limited benefit. RMS induced robust expansion of CXCR2+CD11b+Ly6Ghi MDSCs, and CXCR2 deficiency prevented CD11b+Ly6Ghi MDSC trafficking to the tumor. When tumor trafficking of MDSCs was inhibited by CXCR2 deficiency, or after anti-CXCR2 monoclonal antibody therapy, delayed anti-PD1 treatment induced significant antitumor effects. Thus, CXCR2+CD11b+Ly6Ghi MDSCs mediate local immunosuppression, which limits the efficacy of checkpoint blockade in murine RMS. Human pediatric sarcomas also produce CXCR2 ligands, including CXCL8. Patients with metastatic pediatric sarcomas display elevated serum CXCR2 ligands, and elevated CXCL8 is associated with diminished survival in this population. We conclude that accumulation of MDSCs in the tumor bed limits the efficacy of checkpoint blockade in cancer. We also identify CXCR2 as a novel target for modulating tumor immune escape and present evidence that CXCR2+CD11b+Ly6Ghi MDSCs are an important suppressive myeloid subset in pediatric sarcomas. These findings present a translatable strategy to improve the efficacy of checkpoint blockade by preventing trafficking of MDSCs to the tumor site.