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Background Osteosarcoma (OS) is the most common solid tumor-forming bone malignancy. Surgery, chemo/radiotherapy exist as treatment methods but survival rates haven’t improved over the past decades. 1 The OS tumor microenvironment (TME) is hypoxic and contains immunosuppressive cells such as myeloid derived suppressor cells (MDSCs), which impair the cytotoxicity of natural killer (NK) cells.2 Immunosuppressive effects of the TME can be alleviated by genetic engineering of NK cells to resist hypoxia and enhance their ability to target cancer or immunosuppressive cells.3 Methods Saos2 and Saos2-LM7 cells, which overexpress PD-1 and B7-H3, were used as human OS models. NK cells were evaluated for their ability to upregulate PD-L1 in the presence of OS cells. We generated gene-modified NK cells expressing B7-H3.CARs which secrete anti-PD-L1 scFv in the OS TME. The engineered NK cells were further evaluated for their efficacy against OS, and release of anti-PD-L1 was functionally tested. MDSC-like cells were generated by culturing PBMCs with IL-6 and GM-CSF cytokines. 4 These cells were then cocultured with allogeneic pNK and OS cells and the cytotoxicity and viability of pNK was assessed. Further engineering of CAR-NK cells renders them able to co-target MDSCs alongside OS cells.Results OS cells overexpress PD-L1 and B7-H3. NK cells were found to upregulate expression of PD-L1 in the presence of OS cells, becoming responsive to the secreted anti-PD-L1 scFv. Genetically engineered NK cells to express a B7-H3.CAR alongside a tumor-cleavable anti-PD-L1 scFv demonstrated significantly enhanced cytotoxicity against OS cells, while functional cleavage of anti-PD-L1 was shown to be able to bind and inhibit OS proliferation while stimulating NK cells. MDSC like cells do not affect the cytotoxicity and viability of allogeneic pNK but lead to an increased secretion of IFN-γ, and can be targeted with engineered NK cells.Conclusions High PD-L1 expression has been correlated with OS progression and metastasis, 5 while its upregulation on NK cells serves as a mechanism of NK cell engagement in the TME.6 In this work, we have established engineered NK cells that can secrete the PD-L1-blocking scFv to target PD-L1 in the TME, stimulate NK and bystander effector cells, and specifically target B7-H3 on OS cells. Also, increase in IFN-γ secretion by allogeneic pNK cells in presence of MDSCs opens an avenue for engineered NK cells that target MDSCs. Our ongoing investigation into simultaneous targeting of MDSCs and OS cells could provide an effective immunotherapy against OS.Acknowledgements Authors gratefully acknowledge the funding from Purdue College of Pharmacy, Purdue Center for Cancer Research, National Institutes of Health (National Cancer Institute) and the V Foundation for Cancer Research.References Ritter J, Bielack SS. Osteosarcoma. Ann. Oncol. Off. J. Eur. Soc. Med. Oncol. 2010;21(Suppl 7):vii320-325.Zhu T, et al. Immune microenvironment in osteosarcoma: components, therapeutic strategies and clinical applications. Front. Immunol. 2022;13:907550.Coyle KM, Hawke LG, Ormiston ML. Addressing natural killer cell dysfunction and plasticity in cell-based cancer therapeutics. Cancers. 2023;15:1743.Lechner MG, Liebertz DJ, Epstein AL. Characterization of cytokine-induced myeloid-derived suppressor cells from normal human peripheral blood mononuclear cells. J. Immunol. 2012;185:2273–2284.Koirala P, et al. Immune infiltration and PD-L1 expression in the tumor microenvironment are prognostic in osteosarcoma. Sci. Rep. 2016;6:30093.Sierra JM, et al. Tumor-experienced human NK cells express high levels of PD-L1 and inhibit CD8+ T cell proliferation. Front. Immunol. 2021;12:745939.Ethics Approval Primary human NK (PNK) cells were obtained from healthy adult donors approved under Purdue University’s Institutional Review Board (IRB) (IRB-approved protocol no.: 2024-168) All animal experiments described in this study were approved by the Purdue University Animal Care and Use Committee (Protocol no.: 1112000342)