A myeloid-specific c-fms-rtTA/(TetO)7-CMV-MMP12 bitransgenic mouse model was created. Induction of MMP12 abnormally elevated frequencies and numbers of common myeloid progenitor (CMP) and granulocyte/macrophage progenitor (GMP) populations, and decreased the frequency and number of the megakaryocyte/erythrocyte progenitor (MEP) population in bone marrow. CD11b+/Gr-1+ immature cell population increased in multiple organs. An immunosuppressive function on T cell proliferation and function by CD11b+/Gr-1+ immature cells was seen in vitro and in vivo from MMP12 over-expression. MMP12 stimulated (Lin−) progenitor cells to differentiate into CD11b+/Gr-1+ immature cells showing immunosuppression on T cell proliferation and function in vitro. Regulatory T cells were increased. In the lung, concentration of interleukin (IL)-6 was increased, which activated oncogenic signal transducer and increased expression of Stat3 downstream genes in epithelial tumor progenitor cells. Spontaneous emphysema and lung adenocarcinoma sequentially developed after MMP12 over-expression. MMP12-induced myeloid cell autonomous defect led to abnormal myelopoiesis, immune suppression and lung adenocarcinoma.