Tumor progression is facilitated by regulatory T cells (Treg) and restricted by effector T cells. In this study, we document parallel regulation of CD8⁺ T cells and Foxp3⁺ Tregs by programmed death-1 (PD-1, PDCD1). In addition, we identify an additional role of CTL antigen-4 (CTLA-4) inhibitory receptor in further promoting dysfunction of CD8⁺ T effector cells in tumor models (CT26 colon carcinoma and ID8-VEGF ovarian carcinoma). Two thirds of CD8⁺ tumor-infiltrating lymphocytes (TIL) expressed PD-1, whereas one third to half of CD8⁺ TIL coexpressed PD-1 and CTLA-4. Double-positive (PD-1⁺CTLA-4⁺) CD8⁺ TIL had characteristics of more severe dysfunction than single-positive (PD-1⁺ or CTLA-4⁺) TIL, including an inability to proliferate and secrete effector cytokines. Blockade of both PD-1 and CTLA-4 resulted in reversal of CD8⁺ TIL dysfunction and led to tumor rejection in two thirds of mice. Double blockade was associated with increased proliferation of antigen-specific effector CD8⁺ and CD4⁺ T cells, antigen-specific cytokine release, inhibition of suppressive functions of Tregs, and upregulation of key signaling molecules critical for T-cell function. When used in combination with GVAX vaccination (consisting of granulocyte macrophage colony-stimulating factor–expressing irradiated tumor cells), inhibitory pathway blockade induced rejection of CT26 tumors in 100% of mice and ID8-VEGF tumors in 75% of mice. Our study indicates that PD-1 signaling in tumors is required for both suppressing effector T cells and maintaining tumor Tregs, and that PD-1/PD-L1 pathway (CD274) blockade augments tumor inhibition by increasing effector T-cell activity, thereby attenuating Treg suppression. Cancer Res; 73(12); 3591–603. ©2013 AACR.