Despite continuous contact with fungi, immunocompetent individuals rarely develop pro-inflammatory antifungal immune responses. The underlying tolerogenic mechanisms are incompletely understood. Using both mouse models and human patients, we show that infection with the human pathogenic fungi Aspergillus fumigatus and Candida albicans induces a distinct subset of neutrophilic myeloid-derived suppressor cells (MDSCs), which functionally suppress T and NK cell responses. Mechanistically, pathogenic fungi induce neutrophilic MDSCs through the pattern recognition receptor Dectin-1 and its downstream adaptor protein CARD9. Fungal MDSC induction is further dependent on pathways downstream of Dectin-1 signaling, notably reactive oxygen species (ROS) generation as well as caspase-8 activity and interleukin-1 (IL-1) production. Additionally, exogenous IL-1β induces MDSCs to comparable levels observed during C. albicans infection. Adoptive transfer and survival experiments show that MDSCs are protective during invasive C. albicans infection, but not A. fumigatus infection. These studies define an innate immune mechanism by which pathogenic fungi regulate host defense.