Myeloid derived suppressor cells (MDSCs), which suppress anti-tumor or anti-viral immune responses, are expanded in the peripheral blood and tissues of patients/animals with cancer or viral infectious diseases. We here show that in chronic SIV infection of Indian rhesus macaques, the frequency of MDSCs in the bone marrow (BM) was paradoxically and unexpectedly decreased, but increased in peripheral blood. Reduction of BM MDSCs was found in both CD14⁺MDSC and Lin^-CD15⁺MDSC subsets. The reduction of MDSCs correlated with high plasma viral loads and low CD4⁺ T cell counts, suggesting that depletion of BM MDSCs was associated with SIV/AIDS disease progression. Of note, in SHIV_SF162P4-infected macaques, which naturally control viral replication within a few months of infection, the frequency of MDSCs in the bone marrow was unchanged. To investigate the mechanisms by which BM MDSCs were reduced during chronic SIV infection, we tested several hypotheses: depletion due to viral infection, alterations in MDSC trafficking, and/or poor MDSC replenishment. We found that the possible mobilization of MDSCs from BM to peripheral tissues and the slow self-replenishment of MDSCs in the BM, along with the viral infection-induced depletion, all contribute to the observed BM MDSC reduction. We first demonstrate MDSC SIV infection in vivo. Correlation between BM CD14⁺MDSC reduction and CD8⁺ T cell activation in tissues is consistent with decreased immune suppression by MDSCs. Thus, depletion of BM MDSCs may contribute to the pathologic immune activation during chronic SIV infection and by extension HIV infection.