TYRO3, AXL, and MERTK constitute the TAM family of receptor tyrosine kinases, which play important roles in tumor growth, survival, cell adhesion, as well as innate immunity, phagocytosis, and immune-suppressive activity. Therefore, targeting both AXL and MERTK kinases may directly impact tumor growth and relieve immunosuppression. We describe here the discovery of INCB081776, a potent and selective dual inhibitor of AXL and MERTK that is currently in phase 1 clinical trials. In cellular assays, INCB081776 effectively blocked autophosphorylation of AXL or MERTK with low nanomolar half maximal inhibitory concentration values in tumor cells and Ba/F3 cells transfected with constitutively active AXL or MERTK. INCB081776 inhibited activation of MERTK in primary human macrophages and partially reversed M2 macrophage–mediated suppression of T-cell proliferation, which was associated with increased interferon-γ production. In vivo, the antitumor activity of INCB081776 was enhanced in combination with checkpoint blockade in syngeneic models, and resulted in increased proliferation of intratumoral CD4+ and CD8+ T cells. Finally, antitumor activity of INCB081776 was observed in a subset of sarcoma patient–derived xenograft models, which was linked with inhibition of phospho-AKT. These data support the potential therapeutic utility of INCB081776 as an immunotherapeutic agent capable of both enhancing tumor immune surveillance and blocking tumor cell survival mechanisms.