The cell-autonomous balance of immune-inhibitory and -stimulatory signals is a critical process in cancer immune evasion. Using patient-derived co-cultures, humanized mouse models, and single cell RNA-sequencing of patient melanomas biopsied before and on immune checkpoint blockade, we find that intact cancer-cell-intrinsic expression of CD58 and ligation to CD2 is required for anti-tumor immunity and is predictive of treatment response. Defects in this axis promote immune evasion through diminished T cell activation, impaired intratumoral T cell infiltration and proliferation, and concurrently increased PD-L1 protein stabilization. Through CRISPR-Cas9 and proteomics screens, we identify and validate CMTM6 as critical for CD58 maintenance and upregulation of PD-L1 upon CD58 loss. Competition by CD58 and PD-L1 for CMTM6 (via both extracellular loop domains) determines their rate of endosomal recycling over lysosomal degradation. Overall, we describe an underappreciated yet critical axis of cancer immunity and provide a molecular basis for how cancer cells balance immune inhibitory and stimulatory cues.