A majority of cancers fail to respond to immunotherapy with antibodies targeting immune checkpoints, such as cytotoxic T-lymphocyte antigen-4 (CTLA-4) or programmed death-1 (PD-1)/PD-1 ligand (PD-L1). Cancers frequently express transforming growth factor-β (TGFβ), which drives immune dysfunction in the tumor microenvironment by inducing regulatory T cells (Tregs) and inhibiting CD8+ and TH1 cells. To address this therapeutic challenge, we invent bifunctional antibody-ligand traps (Y-traps) comprising an antibody targeting CTLA-4 or PD-L1 fused to a TGFβ receptor II ectodomain sequence that simultaneously disables autocrine/paracrine TGFβ in the target cell microenvironment (a-CTLA4-TGFβRIIecd and a-PDL1-TGFβRIIecd). a-CTLA4-TGFβRIIecd is more effective in reducing tumor-infiltrating Tregs and inhibiting tumor progression compared with CTLA-4 antibody (Ipilimumab). Likewise, a-PDL1-TGFβRIIecd exhibits superior antitumor efficacy compared with PD-L1 antibodies (Atezolizumab or Avelumab). Our data demonstrate that Y-traps counteract TGFβ-mediated differentiation of Tregs and immune tolerance, thereby providing a potentially more effective immunotherapeutic strategy against cancers that are resistant to current immune checkpoint inhibitors.