MIR4435-2HG, also known as LINC00978, has previously been described as an oncogenic long noncoding RNA (lncRNA). However, we show here that Mir4435-2hg depletion promoted colorectal tumorigenesis and progression in in vivo models of colitis-associated colorectal cancer, spontaneous intestinal adenomatous polyposis, and subcutaneous tumors. Alteration of MIR4435-2HG in colorectal cancer cells did not change the potential for cell proliferation, migration, or invasion in vitro. RNAscope assays showed that most MIR4435-2HG was located in the tumor stroma, which caused high expression of MIR4435-2HG in colorectal cancer tumor tissue. Transcriptome analysis of colorectal cancer tissues from wild-type and Mir4435-2hg–deficient mice revealed Mir4435-2hg as a tumor suppressor gene that regulated the immune microenvironment. Loss of Mir4435-2hg led to a decline in neutrophils and elevation of polymorphonuclear myeloid-derived suppressor cells (PMN-MDSC). In tissue-specific Mir4435-2hg knockout mice, we confirmed that Mir4435-2hg depletion in neutrophils, but not in intestinal epithelial cells, promoted colorectal cancer progression. Mechanistically, Mir4435-2hg depletion enhanced the immunosuppressive ability of PMN-MDSCs by disturbing their fatty acid metabolism. These findings suggest that MIR4435-2HG is a tumor-suppressing lncRNA whose deficiency could increase tumor-infiltrating PMN-MDSCs and enhance the immunosuppressive potential of PMN-MDSCs to promote colorectal cancer development. This provides a theoretical basis for further illustrating the pathogenesis of colorectal cancer and a potential antitumor immunotherapy target.