Programmed Death-1 (PD-1) is a negative regulator of T cell activation and proliferation that mediates suppressive action by binding to its ligands PD-L1 and PD-L2. The well-established immunosuppressive properties of PD-1/PD-L1 interaction resulting in the re-establishment of peripheral tolerance makes PD-1 an interesting target for therapeutic intervention in cancer patients. In addition to its relevance in tumor-specific immunity, recent studies demonstrate that PD-1 expression on T cells correlates with viral load in HIV and HCV infected patients and further identified PD-1 expression as a marker for exhausted virus-specific CD8+ T cells. In particular, PD-1+CD8+ T cells show impaired effector functions and PD-1 associated T cell exhaustion could be restored by blocking the PD-1/PD-L1 interaction. This results in recovery of virus-specific CD8+ T cell mediated immunity, suggesting that interrupting PD-1 signaling using an antagonistic antibody restores T-cell effector functions. Thus, immunotherapy based on the blockade of PD-1/PD-L1 interaction does not only result in breakdown of effector T-cell tolerance to tumor antigens, but in addition also represents a promising therapeutic strategy for reactivation of virus-specific effector T cells to exert pathogen eradication in chronic viral infections. In this review, we give a comprehensive overview about the immunological functions of PD-1 mediated signaling in T cells with special emphasis on its immune regulatory functions in the context of cancer and chronic viral infections. Moreover, we will summarize recent data obtained in animal models, in-vitro preclinical approaches in patients and their implementation in clinical trials for treating patients with cancer and chronic viral infections.