B7-H1 (aka PD-L1) blocking antibodies have been used in treatment of human cancers through blocking B7-H1 expressed by tumor cells; however, their impact on B7-H1 expressing tumor-reactive CD8+ T cells is still unknown. Here, we report that tumor-reactive CD8+ T cells expressing B7-H1 are functional effector cells. In contrast to normal B7-H1 blocking antibody, B7-H1 antibodies capable of activating p38 MAPK lose their antitumor activity by deleting B7-H1+ tumor-reactive CD8+ T cells via p38 MAPK pathway. B7-H1 deficiency or engagement with certain antibody results in more activation of p38 MAPK that leads to T cell apoptosis. DNA-PKcs is a new intracellular partner of B7-H1 in the cytoplasm of activated CD8+ T cells. B7-H1 suppresses p38 MAPK activation by sequestering DNA-PKcs in order to preserve T cell survival. Our findings provide a new mechanism of action of B7-H1 in T cells and have clinical implications in cancer immunotherapy when anti-B7-H1 (PD-L1) antibody is applied.