Abstract Thalidomide-like drugs have been approved for the treatment of human multiple myeloma, with their direct antitumor effects and immunomodulatory functions well documented. However, the exact molecular mechanisms that govern these effects remain unclear. Here we demonstrate that pomalidomide promotes immune response by inhibiting expression of PD-L1. Pomalidomide inhibited PD-L1 expression on tumor cells to promote CTL activity in vitro and suppressed PD-L1 upregulation on antigen-presenting cells to prevent peptide-induced T-cell tolerance. Knockout of PD-L1 on tumor cells or in mice completely eliminated the immunomodulatory effect of pomalidomide. Furthermore, pomalidomide synergized with other immunotherapies to improve anticancer therapy. Taken together, this study identifies a new mechanism for the immunomodulatory functions of pomalidomide in cancer therapy. These results also offer a clinical approach for blocking PD-L1 induction and potentially promoting antitumor immunity. Significance: These findings report that the immunomodulatory drug pomalidomide, widely used to treat myeloma and other cancers, enhances antitumor immunity by inhibiting PD-1/PD-L1 expression.