Neutrophils are dynamic with their phenotype and function shaped by the microenvironment, such as the N1 antitumor and N2 pro-tumor states within the tumor microenvironment (TME), but its regulation remains undefined. Here we examine TGF-β1/Smad3 signaling in tumor-associated neutrophils (TANs) in non-small cell lung carcinoma (NSCLC) patients. Smad3 activation in N2 TANs is negatively correlate with the N1 population and patient survival. In experimental lung carcinoma, TANs switch from a predominant N2 state in wild-type mice to an N1 state in Smad3-KO mice which associate with enhanced neutrophil infiltration and tumor regression. Neutrophil depletion abrogates the N1 anticancer phenotype in Smad3-KO mice, while adoptive transfer of Smad3-KO neutrophils reproduces this protective effect in wild-type mice. Single-cell analysis uncovers a TAN subset showing a mature N1 phenotype in Smad3-KO TME, whereas wild-type TANs mainly retain an immature N2 state due to Smad3. Mechanistically, TME-induced Smad3 target genes related to cell fate determination to preserve the N2 state of TAN. Importantly, genetic deletion and pharmaceutical inhibition of Smad3 enhance the anticancer capacity of neutrophils against NSCLC via promoting their N1 maturation. Thus, our work suggests that Smad3 signaling in neutrophils may represent a therapeutic target for cancer immunotherapy.