Lymphocyte-activation gene 3 (LAG-3) is an immune inhibitory receptor, with major histocompatibility complex class II (MHC-II) as a canonical ligand. However, it remains controversial whether MHC-II is solely responsible for the inhibitory function of LAG-3. Here, we demonstrate that fibrinogen-like protein 1 (FGL1), a liver-secreted protein, is a major LAG-3 functional ligand independent from MHC-II. FGL1 inhibits antigen-specific T cell activation, and ablation of FGL1 in mice promotes T cell immunity. Blockade of the FGL1-LAG-3 interaction by monoclonal antibodies stimulates tumor immunity and is therapeutic against established mouse tumors in a receptor-ligand inter-dependent manner. FGL1 is highly produced by human cancer cells, and elevated FGL1 in the plasma of cancer patients is associated with a poor prognosis and resistance to anti-PD-1/B7-H1 therapy. Our findings reveal an immune evasion mechanism and have implications for the design of cancer immunotherapy.