Ubiquitin-specific protease 7 (USP7) regulates the stability of a plethora of intracellular proteins involved in the suppression of anti-tumor immune responses and its overexpression is associated with poor survival in many cancers. USP7 impairs the balance of the p53/MDM2 axis resulting in the proteasomal degradation of the p53 tumor suppressor, a process that can be reversed by small-molecule inhibitors of USP7. USP7 was shown to regulate the anti-tumor immune responses in several cases. Its inhibition impedes the function of regulatory T cells, promotes polarization of tumor-associated macrophages, and reduces programmed death-ligand 1 (PD‑L1) expression in tumor cells. The efficacy of small-molecule USP7 inhibitors was demonstrated in vivo. The synergistic effect of combining USP7 inhibition with cancer immunotherapy is a promising therapeutic approach, though its clinical efficacy is yet to be proven. In this review, we focus on the recent developments in understanding the intrinsic role of USP7, its interplay with other molecular pathways, and the therapeutic potential of targeting USP7 functions.