RUNX1 overlapping RNA (RUNXOR) is a long non-coding RNA and plays a pivotal role in the differentiation of myeloid cells via targeting runt-related transcription factor 1 (RUNX1). We and others have previously reported that myeloid-derived suppressor cells (MDSCs) expand and inhibit host immune responses during chronic viral infections; however, the mechanisms responsible for MDSC differentiation and suppressive functions, in particular the role of RUNXOR-RUNX1, remain unclear. Here, we demonstrated that RUNXOR and RUNX1 expressions are significantly upregulated and associated with elevated levels of immunosuppressive molecules, such as arginase 1 (Arg1), inducible nitric oxide synthase (iNOS), signal transducer and activator of transcription 3 (STAT3), and reactive oxygen species (ROS) in MDSCs during chronic hepatitis C virus (HCV) infection. Mechanistically, we discovered that HCV-associated exosomes (HCV-Exo) can induce the expressions of RUNXOR and RUNX1, which in turn regulates miR-124 expression via STAT3 signaling, thereby promoting MDSC differentiation and suppressive functions. Importantly, overexpression of RUNXOR in healthy CD33+ myeloid cells promoted differentiation and suppressive functions of MDSCs. Conversely, silencing RUNXOR or RUNX1 expression in HCV-derived CD33+ myeloid cells significantly inhibited their differentiation and expressions of suppressive molecules and improved the function of co-cultured autologous CD4 T cells. Taken together, these results indicate that the RUNXOR-RUNX1-STAT3-miR124 axis enhances the differentiation and suppressive functions of MDSCs and could be a potential target for immunomodulation in conjunction with antiviral therapy during chronic HCV infection.