The interaction of programmed cell death 1 ligand 1 (PDL1) with its receptor programmed cell death 1 (PD1) inhibits T cell responses, and blockade of this interaction has proven to be an effective immunotherapy for several different cancers. PDL1 can be expressed on the surface of tumour cells, immune cells and other cells in the tumour microenvironment but is also found in extracellular forms. Recent studies have explored the importance of different forms of extracellular PDL1, such as on exosomes or as a freely soluble protein, and have shown that PDL1-expressing exosomes can inhibit antitumour immune responses. In patients with melanoma, exosomal PDL1 is also a marker of immune activation early after initiation of therapy with PD1-blocking antibodies and predicts a clinical response to PD1 blockade. In this Progress article, we highlight recent insights into the role of exosomal PDL1 in immune oncology and how it may be useful as a biomarker for the management of cancer or to define a subset of patients who would benefit from therapeutics that block exosome production.