The immune suppressive molecule programmed death-1 (PD-1) is upregulated in activated T lymphocytes and inhibits T-cell function upon binding to its ligands B7-H1 (PD-L1, CD274) and B7-DC (PD-L2, CD273). Substantial experimental data from in vitro cell culture systems and animal models, and more recently from clinical trials, indicate that PD-1/PD-1-ligand interactions are a major mechanism of immune suppression within the tumor microenvironment. Initial clinical studies of antibodies directed against PD-1 and B7-H1 showed both an encouraging safety profile and remarkable antitumor activity in subsets of patients with metastatic disease, including malignancies--such as lung cancer--which were previously thought to be unresponsive to immunotherapy. Preliminary data have suggested a correlation between tumor membrane B7-H1 expression and clinical response to anti-PD-1 antibodies. Several key challenges remain to optimize development of PD-1/B7-H1 pathway blockade, including defining the biologic significance of all potential ligand-receptor interactions in the tumor microenvironment, developing more accurate predictive biomarkers of response, determining the breadth of activity in human malignancies, and developing rational combinations of therapy that address key mechanisms involved in positive and negative regulation of antitumor immune responses.