IFNγ-mediated signaling in tumor cells can induce immunosuppressive responses and cause tumor resistance to immunotherapy. Blocking TGFβ promotes T lymphocyte infiltration and turns immunologically cold tumors into hot tumors, thereby improving the efficacy of immunotherapy. Several studies have shown that TGFβ inhibits IFNγ signaling in immune cells. We thus sought to determine whether TGFβ affects IFNγ signaling in tumor cells and plays a role in the development of acquired resistance to immunotherapy. TGFβ stimulation of tumor cells increased SHP1 phosphatase activity in an AKT-Smad3-dependent manner, decreased IFNγ-mediated tyrosine phosphorylation of JAK1/2 and STAT1, and suppressed the expression of STAT1-dependent immune evasion-related molecules, e.g., PD-L1, IDO1, herpes virus entry mediator (HVEM), and galectin-9 (Gal-9). In a lung cancer mouse model, dual blockade of TGFβ and PD-L1 led to superior antitumor activity and prolonged survival compared with anti-PD-L1 therapy alone. However, prolonged combined treatment resulted in tumor resistance to immunotherapy and increased expression of PD-L1, IDO1, HVEM, and Gal-9. Interestingly, after initial anti-PD-L1 monotherapy, dual TGFβ and PD-L1 blockade promoted both immune evasion gene expression and tumor growth compared with that in tumors treated with continuous PD-L1 monotherapy. Alternatively, treatment with JAK1/2 inhibitor following initial anti-PD-L1 therapy effectively suppressed tumor growth and downregulated immune evasion gene expression in tumors, indicating the involvement of IFNγ signaling in immunotherapy resistance development. These results demonstrate an unappreciated effect of TGFβ on the development of IFNγ-mediated tumor resistance to immunotherapy.Blocking TGFβ facilitates IFNγ-mediated resistance to anti-PD-L1 therapy due to the role of TGFβ in inhibiting IFNγ-induced immunoevasion by increasing SHP1 phosphatase activity in tumor cells.©2023 American Association for Cancer Research.