Abstract BACKGROUND PD‐L1 (programmed death ligand 1, B7‐H1) is a cell surface glycoprotein that can impair T‐cell function. PD‐L1 is aberrantly expressed by multiple human malignancies and has been shown to carry a highly unfavorable prognosis in patients with kidney cancer. The role of PD‐L1 was evaluated as a mechanism for local stage progression in urothelial carcinoma (UC) of the bladder. METHODS Using immunohistochemistry, PD‐L1 expression was evaluated in a cohort of 280 high‐risk UCs of the bladder. PD‐L1 was modeled as a predictor of bladder cancer stage using ordinal logistic regression. Other covariates evaluated as potential confounders included age, gender, tumor grade, and lymphocytic infiltration. Further, PD‐L1 was evaluated as a potential mechanism of bacillus Calmette‐Guerin (BCG) failure in the subset of high‐risk nonmuscle‐invasive tumors that received this treatment. RESULTS PD‐L1 expression was observed in 7% of pTa, 16% of pT1, 23% of pT2, 30% of pT3/4, and 45% of carcinoma in situ (CIS) tumors. PD‐L1 expression was associated with high‐grade tumors (odds ratio [OR] = 2.4, P = .009) and tumor infiltration by mononuclear cells (OR = 5.5, P = .004). We observed that the key determinants of stage progression in this cohort were World Health Organization/International Society of Urologic Pathology (WHO/ISUP) high‐grade tumor pathology (OR = 4.77, 95% confidence interval [CI]: 2.73–8.34; P < .001) and PD‐L1 expression (OR = 2.20, P = .012). PD‐L1 expression was found to be extremely abundant in the BCG‐induced bladder granulomata in 11 of 12 patients failing BCG treatment. CONCLUSIONS Collectively, these data indicate that tumor PD‐L1 may facilitate localized stage‐advancement of UC and attenuate responses to BCG immunotherapy by neutralizing T cells that normally guard against cancer invasion from the epithelium into the bladder musculature. Cancer 2007. © 2007 American Cancer Society.