Prolonged interferon (IFN) signaling in cancer cells can promote resistance to immune checkpoint blockade (ICB). How cancer cells retain effects of prolonged IFN stimulation to coordinate resistance is unclear. We show that, across human and/or mouse tumors, immune dysfunction is associated with cancer cells acquiring epigenetic features of inflammatory memory. Here, inflammatory memory domains, many of which are initiated by chronic IFN-γ, are maintained by signal transducer and activator of transcription (STAT)1 and IFN regulatory factor (IRF)3 and link histone 3 lysine 4 monomethylation (H3K4me1)-marked chromatin accessibility to increased expression of a subset of IFN-stimulated genes (ISGs). These ISGs include the RNA sensor OAS1 that amplifies type I IFN (IFN-I) and immune inhibitory genes. Abrogating cancer cell IFN-I signaling restores anti-programmed cell death protein 1 (PD1) response by increasing IFN-γ in immune cells, promoting dendritic cell and CD8+ T cell interactions, and expanding T cells toward effector-like states rather than exhausted states. Thus, cancer cells acquire inflammatory memory to augment a subset of ISGs that promote and predict IFN-driven immune dysfunction.