PEGylated arginine deiminase (ADI-PEG 20) is being investigated in clinical studies in arginine auxotrophic cancers and is well-tolerated. The anti-tumor properties of ADI-PEG 20 have been extensively investigated - ADI-PEG 20 inhibits the growth of auxotrophic cancers in vitro and in vivo - however, its impact on immune cells is largely unknown. Here we report the potential impact of ADI-PEG 20 on the tumor immune microenvironment. ADI-PEG 20 induced immunosuppressive programmed death-ligand 1 expression on some cancer cells in vitro, but the magnitude of the increase was cell line dependent and in most relatively small. Using healthy donor human peripheral blood mononuclear cells (PBMCs) we discovered that when present during initiation of T cell activation (but not later on) ADI-PEG 20 can inhibit their differentiation after early activation stage manifested by the expression of CD69 marker. In vivo, ADI-PEG 20 induced tumor T-cell infiltration in a poorly immunogenic syngeneic mouse melanoma B16-F10 model and reduced its growth as a single agent or when combined with anti-PD-1 mAb. It was also effective by itself or in combination with anti-PD-L1 mAb in CT26 colon carcinoma syngeneic model.