B7‐H5 and its cognate receptor CD28H are T lymphocyte second signaling transduction molecules. Here we aimed to explore the function of this pathway in pancreatic cancer in vitro and in vivo, and evaluated the clinical significance in 136 patients with pancreatic ductal adenocarcinoma enrolled from January 2012 to February 2017 in our hospital. Surgical tumor specimens were collected for immunohistochemical staining to evaluate B7‐H5 expression. Patients’ baseline characteristics, including gender, age, tumor size, tumor location, tumor grading, clinical TNM staging, tumor infiltrating lymphocytes, CA19‐9 and chemotherapy treatment, along with the subsequent follow‐up data, were documented and analyzed. When co‐cultured with T cells, pancreatic cancer PC cells with high B7‐H5 expression induced a more potent immune reaction, indicated by elevated cytokine release and increased proliferation of T lymphocytes compared with cells exhibiting low B7‐H5 expression. Xenograft pancreatic tumors derived from high B7‐H5 expression PC cells exhibited attenuated growth compared to tumors from low B7‐H5 expression cells after transfusion with T lymphocytes in immune‐deficient mice. Of the 136 PDAC tumor tissues, 93 (68.38%) were strong and 43 (31.62%) were weak B7‐H5 expression. Patients with strong B7‐H5 expression had significantly longer overall survival than those with weak expression (median: 16.5 vs 11.5 months, P = .017). TNM staging, tumor location and subsequent chemotherapy were also prognostic factors in these patients. Collectively, B7‐H5/CD28H is a co‐stimulatory signal pathway, and expression of B7‐H5 is associated with improved disease prognosis in patients with pancreatic cancer.