Co-inhibitory and checkpoint molecules suppress T cell function in the tumor microenvironment, thereby rendering T cells dysfunctional. Although immune checkpoint blockade is a successful treatment option for multiple human cancers, severe autoimmune-like adverse effects can limit its application. Here, we show that the gene encoding peptidoglycan recognition protein 1 (PGLYRP1) is highly coexpressed with genes encoding co-inhibitory molecules, indicating that it might be a promising target for cancer immunotherapy. Genetic deletion of Pglyrp1 in mice led to decreased tumor growth and an increased activation/effector phenotype in CD8+ T cells, suggesting an inhibitory function of PGLYRP1 in CD8+ T cells. Surprisingly, genetic deletion of Pglyrp1 protected against the development of experimental autoimmune encephalomyelitis, a model of autoimmune disease in the central nervous system. PGLYRP1-deficient myeloid cells had a defect in antigen presentation and T cell activation, indicating that PGLYRP1 might function as a proinflammatory molecule in myeloid cells during autoimmunity. These results highlight PGLYRP1 as a promising target for immunotherapy that, when targeted, elicits a potent antitumor immune response while protecting against some forms of tissue inflammation and autoimmunity.