Abstract
Interferon-gamma (IFNG) augments immune function yet promotes T cell exhaustion through PDL1. How these opposing effects are integrated to impact immune checkpoint blockade (ICB) is unclear. We show that while inhibiting tumor IFNG signaling decreases interferon-stimulated genes (ISGs) in cancer cells, it increases ISGs in immune cells by enhancing IFNG produced by exhausted T cells (TEX). In tumors with favorable antigenicity, these TEX mediate rejection. In tumors with neoantigen or MHC-I loss, TEX instead utilize IFNG to drive maturation of innate immune cells, including a PD1+TRAIL+ ILC1 population. By disabling an inhibitory circuit impacting PD1 and TRAIL, blocking tumor IFNG signaling promotes innate immune killing. Thus, interferon signaling in cancer cells and immune cells oppose each other to establish a regulatory relationship that limits both adaptive and innate immune killing. In melanoma and lung cancer patients, perturbation of this relationship is associated with ICB response independent of tumor mutational burden.