Programmed cell death receptor 1 (PD-1) and its ligand, PD-L1, are important immune checkpoint proteins. Although antibodies that block PD-1/PD-L1 have shown promising clinical efficacy in a subset of cancer patients, the detailed cellular and molecular mechanisms behind anti-PD-1 and anti-PD-L1 immunotherapy are not well defined. Specifically, the way in which PD-L1 contributes to immune suppression on tumor and non-tumor cells remains controversial. By selectively blocking PD-L1 on either tumor or non-tumor cells, we demonstrated that PD-L1 from both sources suppressed the anti-tumor T-cell response. Blocking PD-L1 on either tumor cells or non-tumor cells inhibited tumor growth and enhanced immune cell infiltration, as well as the tumor-specific T-cell response. Further, simultaneously blocking tumor- and non-tumor-derived PD-L1 maximized anti-tumor T-cell responses and demonstrated synergy. In addition, the relative contribution of PD-L1 on tumor and non-tumor cells to immune suppression depended on the PD-L1 expression level. Lastly, we found that the F4/80 receptor was involved in the anti-tumor effect of PD-L1 blockade. Taken together, our data indicate that PD-L1 on both tumor and non-tumor cells is critical for T-cell inhibition, which provides new directions for the optimization of PD-L1-blocking antibodies and the development of clinical biomarker strategies.