Mycobacterium bovis Bacillus Calmette-Guerin (BCG), the first line treatment for non-muscle invasive bladder cancer (NMIBC), promotes production of type I interferons, particularly interferon (IFN)-γ. Prolonged inflammation and IFN-γ exposure are known to cause an adaptive immune response, enabling immune escape and proliferation by tumor cells. We investigated HLA-E and NKG2A, a novel T and NK cell checkpoint pathway, as a driver of adaptive resistance in BCG unresponsive NMIBC. We observed ubiquitous inflammation in all patients after BCG immunotherapy, regardless of recurrence status. IFN-γ was shown to drive tumor expression of HLA-E and PD-L1. Further, NKG2A-expressing NK and CD8 T cells were enriched in BCG unresponsive tumors and with enhanced capacity for cytolytic functions. Strikingly, in situ spatial analyses revealed that HLA-EBRIGHT tumors are activated to recruit NK and T cells via chemokine production potentially sparing HLA-EDIM/NEG tumors that would otherwise be susceptible to lysis. Finally, blood-derived NK cells retained antitumor functions at time of tumor recurrence. These data support combined NKG2A and PD-L1 blockade for BCG unresponsive disease.