Immune checkpoint blockade (ICB) has been a remarkable clinical advance for cancer; however, the majority of patients do not respond to ICB therapy. We show that metastatic disease in the pleural and peritoneal cavities is associated with poor clinical outcomes after ICB therapy. Cavity-resident macrophages express high levels of Tim-4, a receptor for phosphatidylserine (PS), and this is associated with reduced numbers of CD8⁺ T cells with tumor-reactive features in pleural effusions and peritoneal ascites from patients with cancer. We mechanistically demonstrate that viable and cytotoxic anti-tumor CD8⁺ T cells upregulate PS and this renders them susceptible to sequestration away from tumor targets and proliferation suppression by Tim-4⁺ macrophages. Tim-4 blockade abrogates this sequestration and proliferation suppression and enhances anti-tumor efficacy in models of anti-PD-1 therapy and adoptive T cell therapy in mice. Thus, Tim-4⁺ cavity-resident macrophages limit the efficacy of immunotherapies in these microenvironments.