Immunotherapies targeting immune checkpoints have revolutionized cancer treatment by normalizing the immunosuppressive microenvironment of tumors and reducing adverse effects on the immune system. Indoleamine 2,3-dioxygenase (IDO) inhibitors have garnered attention as a promising therapeutic agent for cancer. However, their application alone has shown limited clinical benefits. Cabozantinib, a multitarget tyrosine kinase inhibitor, holds immunomodulatory potential by promoting infiltration and activation of effector cells and inhibiting suppressive immune cells. Despite its potential, cabozantinib as a monotherapy has shown limited efficacy in terms of objective response rate. In this study, IDO-IN-7 and cabozantinib are coencapsulated into liposomes to enhance tumor accumulation and minimize adverse effects. The liposomal combination exhibits potent cytotoxicity and inhibits the function of IDO enzyme. Furthermore, the dual-targeted treatment effectively inhibits tumor development and reverses the suppressive tumor microenvironment by regulating both adaptive and innate branch of immune system. This is evidenced by pronounced infiltration of T cells and B cells, a decrease of regulatory T lymphocytes, a shift to a proinflammatory phenotype of tumor-associated macrophages, and increases levels of neutrophils. This is the first developed of a liposome-delivered combination of IDO inhibitors and cabozantinib, and holds great potential for future clinical application as a promising anticancer strategy.