The expression of B7‐H1 on tumor infiltrating lymphocytes usually correlates with poor prognosis in cancer patients. It has also been observed that B7‐H1 can deliver signals into T cells, and therefore we hypothesized that B7‐H1 on T cells reduces T cell‐mediated anti‐tumor immunity. B7‐H1 knockout (KO) mice, when compared to their WT counterparts, have increased numbers of CD8 T cells with memory effector phenotype, the population of T cells that quickly respond upon antigen restimulation. In addition, B7‐H1 KO CD8 T cells proliferate more rapidly during homeostatic expansion. Once activated, these cells exhibit improved CTL function, as demonstrated by increased degranulation and IFN‐gamma production. Blocking the B7‐H1/PD‐1 pathway not only improved the CTL function of CD8 T cells when mixed with PD‐1+ tumors in vitro but also improved their ability to reject established tumors in vivo. This novel functional role for B7‐H1 on CD8 T cells provides us with a new approach to manipulate anti‐tumor T cell response and to improve current tumor immunotherapy. (This work is funded by Mayo Foundation).