The inhibitory receptor PD-1 is expressed on T cells to inhibit select functions when ligated. The complete signaling mechanism downstream of PD-1 has yet to be uncovered. Here, we discovered phosphoprotein associated with glycosphingolipid-enriched microdomains 1 (PAG) is phosphorylated following PD-1 ligation and associate this with inhibitory T cell function. Clinical cohort analysis correlates low PAG expression with increased survival from numerous tumor types. PAG knockdown in T cells prevents PD-1-mediated inhibition of cytokine secretion, cell adhesion, CD69 expression, and ERK204/187 phosphorylation, and enhances phosphorylation of SRC527 following PD-1 ligation. PAG overexpression rescues these effects. In vivo, PAG contributes greatly to the growth of two murine tumors, MC38 and B16, and limits T cell presence within the tumor. Moreover, PAG deletion sensitizes tumors to PD-1 blockade. Here PAG is established as a critical mediator of PD-1 signaling and as a potential target to enhance T cell activation in tumors.