Resolution of acute and chronic viral infections requires activation of innate cells to initiate and maintain adaptive immune responses. Here we report that infection with acute Armstrong (ARM) or chronic Clone 13 (C13) strains of lymphocytic choriomeningitis virus (LCMV) led to two distinct phases of innate immune response. During the first 72 hr of infection, dendritic cells upregulated activation markers and stimulated antiviral CD8(+) T cells, independent of viral strain. Seven days after infection, there was an increase in Ly6C(hi) monocytic and Gr-1(hi) neutrophilic cells in lymphoid organs and blood. This expansion in cell numbers was enhanced and sustained in C13 infection, whereas it occurred only transiently with ARM infection. These cells resembled myeloid-derived suppressor cells and potently suppressed T cell proliferation. The reduction of monocytic cells in Ccr2(-/-) mice or after Gr-1 antibody depletion enhanced antiviral T cell function. Thus, innate cells have an important immunomodulatory role throughout chronic infection.