Dysfunctional T cells in the tumour microenvironment have abnormally high expression of PD-1 and antibody inhibitors against PD-1 or its ligand (PD-L1) have become commonly used drugs to treat various types of cancer1-4. The clinical success of these inhibitors highlights the need to study the mechanisms by which PD-1 is regulated. Here we report a mechanism of PD-1 degradation and the importance of this mechanism in anti-tumour immunity in preclinical models. We show that surface PD-1 undergoes internalization, subsequent ubiquitination and proteasome degradation in activated T cells. FBXO38 is an E3 ligase of PD-1 that mediates Lys48-linked poly-ubiquitination and subsequent proteasome degradation. Conditional knockout of Fbxo38 in T cells did not affect T cell receptor and CD28 signalling, but led to faster tumour progression in mice owing to higher levels of PD-1 in tumour-infiltrating T cells. Anti-PD-1 therapy normalized the effect of FBXO38 deficiency on tumour growth in mice, which suggests that PD-1 is the primary target of FBXO38 in T cells. In human tumour tissues and a mouse cancer model, transcriptional levels of FBXO38 and Fbxo38, respectively, were downregulated in tumour-infiltrating T cells. However, IL-2 therapy rescued Fbxo38 transcription and therefore downregulated PD-1 levels in PD-1+ T cells in mice. These data indicate that FBXO38 regulates PD-1 expression and highlight an alternative method to block the PD-1 pathway.