Controversy surrounds neutrophil function in cancer because neutrophils were shown to provide both pro- and antitumor functions. We identified a heterogeneous subset of low-density neutrophils (LDNs) that appear transiently in self-resolving inflammation but accumulate continuously with cancer progression. LDNs display impaired neutrophil function and immunosuppressive properties, characteristics that are in stark contrast to those of mature, high-density neutrophils (HDNs). LDNs consist of both immature myeloid-derived suppressor cells (MDSCs) and mature cells that are derived from HDNs in a TGF-β-dependent mechanism. Our findings identify three distinct populations of circulating neutrophils and challenge the concept that mature neutrophils have limited plasticity. Furthermore, our findings provide a mechanistic explanation to mitigate the controversy surrounding neutrophil function in cancer.