A combination of anti–CTLA-4 plus anti–PD-1/PD-L1 is the most effective cancer immunotherapy but causes high incidence of immune-related adverse events (irAEs). Here we report that targeting of HIF-1α suppressed PD-L1 expression on tumor cells and tumor-infiltrating myeloid cells, but unexpectedly induced PD-L1 in normal tissues by an IFN-γ–dependent mechanism. Targeting the HIF-1α/PD-L1 axis in tumor cells reactivated tumor-infiltrating lymphocytes and caused tumor rejection. The HIF-1α inhibitor echinomycin potentiated the cancer immunotherapeutic effects of anti–CTLA-4 therapy, with efficacy comparable to that of anti–CTLA-4 plus anti–PD-1 antibodies. However, while anti–PD-1 exacerbated irAEs triggered by ipilimumab, echinomycin protected mice against irAEs by increasing PD-L1 levels in normal tissues. Our data suggest that targeting HIF-1α fortifies the immune tolerance function of the PD-1/PD-L1 checkpoint in normal tissues but abrogates its immune evasion function in the tumor microenvironment to achieve safer and more effective immunotherapy.