Programmed Death-1 (PD-1; CD279) is an inhibitory receptor induced in activated T cells. PD-1 engagement by its ligands, PD-L1 and PD-L2, maintains peripheral tolerance but also compromises anti-tumor immunity. Blocking antibodies against PD-1 or its ligands have revolutionized cancer immunotherapy. However, only a fraction of patients develop durable antitumor responses. Clinical outcomes have reached a plateau without substantial advances by combinatorial approaches. Thus, great interest has recently emerged to investigate, in depth, the mechanisms by which the PD-1 pathway transmits inhibitory signals with the goal to identify molecular targets for improvement of the therapeutic success. These efforts have revealed unpredictable dimensions of the pathway and uncovered novel mechanisms involved in PD-1 and PD-L1 regulation and function. Here, we provide an overview of the recent advances on the mechanistic aspects of the PD-1 pathway and discuss the implications of these new discoveries and the gaps that remain to be filled.