B7-H4, a member of the B7 family of T cell immunomodulatory proteins, has been shown to inhibit T cell responses and neutrophil expansion during bacterial infections. However, the role of B7-H4 in the immune response during tumor growth has been unclear. In this study, we examined the host immune responses in B7-H4–deficient (knockout [KO]) or sufficient (wild-type [WT]) BALB/cJ mice upon transplantation of murine 4T1 carcinoma cells that had little B7-H4 expression. We reveal that host B7-H4 not only dampens the antitumor Th1 responses, but also inhibits the protumor function of myeloid-derived suppressor cells (MDSC). We observed increased expression of both antitumor immune effectors and protumor MDSC-associated transcripts in 4T1 tumors grown in B7-H4 KO mice compared with those grown in WT hosts. Consistently, MDSCs derived from B7-H4 KO mice suppressed T cell proliferation more potently than their WT counterparts. Although the primary growth of 4T1 tumors in B7-H4 KO hosts was similar to that in WT mice, tumors that had grown in B7-H4 KO hosts grew much slower than those from WT mice when subsequently transplanted into WT hosts. Importantly, this differential tumor growth during the secondary transplantation was abrogated when recipient mice lacked T cells, indicating that the immune environment in B7-H4 KO hosts allowed outgrowth of 4T1 tumors with reduced immune-evasive capacities against T cells. Thus, B7-H4 can inhibit both antitumor T cells and protumor MDSCs, influencing the immune-evasive character of the outgrowing tumors. These factors should be considered if B7-H4 blockade is to be used for cancer immunotherapy.