Agonist antibodies (Ab) directed against costimulatory molecules on the surface of antigen-primed T cells are in various stages of pre-clinical and clinical trials, albeit with limited therapeutic benefit as single agents. The underlying mechanisms of action remain incompletely understood. Here, we demonstrate an inhibitory role of ecto-enzyme CD73 for agonistic anti-4-1BB/CD137 Ab therapy. In particular, anti-4-1BB treatment preferentially drives CD73- effector T cell response for tumor inhibition. Anti-CD73 neutralizing Ab further improves anti-4-1BB therapy associated with enhanced anti-tumor T cell immunity. However, the TGF-β-rich tumor milieu confers resistance to anti-4-1BB therapy by sustaining CD73 expression primarily on infiltrating CD8+ T cells across several tumor models. TGF-β blockade results in downregulation of CD73 expression on infiltrating T cells and sensitizes resistant tumors to agonistic anti-4-1BB therapy. Thus, our findings identify a mechanism of action for more effective clinical targeting of 4-1BB or likely other costimulatory molecules.