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Sorafenib—a broad tyrosine kinase inhibitor—is the only approved systemic therapy for advanced hepatocellular carcinoma (HCC), but provides limited survival benefits. Recently, immunotherapy has emerged as a promising treatment strategy, but its role remains unclear in HCCs, which are associated with decreased cytotoxic CD8+ T-lymphocyte infiltration in both murine and human tumors. Moreover, we have shown in mouse models that after sorafenib treatment, intratumoral hypoxia is increased and may fuel evasive resistance. Using orthotopic HCC models, we now show that increased hypoxia after sorafenib treatment promotes immunosuppression, characterized by increased intratumoral expression of the immune checkpoint inhibitor programmed death-ligand 1 (PD-L1) and accumulation of T-regulatory cells and M2-type macrophages. We also show that the recruitment of the immunosuppressive cells is mediated in part by hypoxia-induced upregulation of stromal cell-derived 1 alpha (SDF1α). Inhibition of the SDF1α receptor (C-X-C receptor type 4 or CXCR4) using AMD3100 prevented the polarization toward an immunosuppressive microenvironment after sorafenib treatment, inhibited tumor growth, reduced lung metastasis, and improved survival. However, combination of AMD3100 and sorafenib did not significantly change cytotoxic CD8+ T-lymphocyte infiltration into HCC tumors and did not modify their activation status. In separate experiments, antibody blockade of the PD-L1 receptor PD-1 showed anti-tumor effects in treatment-naïve tumors in orthotopic (grafted and genetically engineered) models of HCC. However, anti-PD-1 antibody treatment had additional anti-tumor activity only when combined with sorafenib and AMD3100, and not when combined with sorafenib alone. Conclusion Anti-PD-1 treatment can boost anti-tumor immune responses in HCC models. When used in combination with sorafenib, this immunotherapy approach shows efficacy only with concomitant targeting of the hypoxic and immunosuppressive microenvironment with agents such as CXCR4 inhibitors.