Immune checkpoint blockade therapies have shown clinical promise in a variety of cancers, but how tumor-infiltrating T cells are activated remains unclear. In this study, we explore the functions of PD-L1 on dendritic cells (DCs), which highly express PD-L1. We observe that PD-L1 on DC plays a critical role in limiting T cell responses. Type 1 conventional DCs are essential for PD-L1 blockade and they upregulate PD-L1 upon antigen uptake. Upregulation of PD-L1 on DC is mediated by type II interferon. While DCs are the major antigen presenting cells for cross-presenting tumor antigens to T cells, subsequent PD-L1 upregulation protects them from killing by cytotoxic T lymphocytes, yet dampens the antitumor responses. Blocking PD-L1 in established tumors promotes re-activation of tumor-infiltrating T cells for tumor control. Our study identifies a critical and dynamic role of PD-L1 on DC, which needs to be harnessed for better invigoration of antitumor immune responses.