The immunosuppressive tumor microenvironment (TME) is a major barrier to immunotherapy. Within solid tumors, why monocytes preferentially differentiate into immunosuppressive tumor associated macrophages (TAMs) but not immunostimulatory dendritic cells (DCs) remains unclear. Using multiple murine sarcoma models, we found that the TME induced tumor cells to produce retinoic acid (RA), which polarized intratumoral monocyte differentiation towards TAMs and away from DCs via suppression of DC-promoting transcription factor Irf4. Genetic inhibition of RA production by tumor cells or pharmacologic inhibition of RA signaling within the TME increased stimulatory monocyte-derived cells, enhanced T cell-dependent anti-tumor immunity and demonstrated striking synergy with immune checkpoint blockade. Further, an RA responsive gene signature in human monocytes correlated with an immunosuppressive TME in multiple human tumors. RA has been long considered as an anti-cancer agent, but our work demonstrates its tumorigenic capability via myeloid-mediated immune suppression and provides proof of concept for targeting this pathway for tumor immunotherapy.