PURPOSE: Although programmed death-(ligand) 1 (PD-(L)1) antibody-based therapy has improved the outcome of cancer patients, acquired resistance to these treatments limits their clinical efficacy. FS118 is a novel bispecific, tetravalent antibody (mAb(2)) against human Lymphocyte Activation Gene 3 (LAG-3) and PD-L1 with the potential to reinvigorate exhausted immune cells and overcome resistance mechanisms to PD-(L)1 blockade. Here, using FS118 and a murine surrogate, we characterised the activity and report a novel mechanism of action of this bispecific antibody. EXPERIMENTAL DESIGN: This study characterises the binding activity and immune function of FS118 in cell lines and human peripheral blood mononuclear cells and further investigates its anti-tumour activity and mechanism of action using a surrogate murine bispecific antibody (mLAG-3/PD-L1 mAb(2)). RESULTS: FS118 demonstrated simultaneous binding to LAG-3 and PD-L1 with high affinity and comparable or better activity than the combination of the single component parts of the mAb(2) in blocking LAG-3 and PD-L1-mediated immune suppression and enhancing T cell activity. In syngeneic tumour mouse models, mLAG-3/PD-L1 mAb(2) significantly suppressed tumour growth. Mechanistic studies revealed decreased LAG-3 expression on T cells following treatment with the mouse surrogate mLAG-3/PD-L1 mAb(2), whereas LAG-3 expression increased upon treatment with the combination of monoclonal antibodies targeting LAG-3 and PD-L1. Moreover, following binding of mLAG-3/PD-L1 mAb(2) to target expressing cells, mouse LAG-3 is rapidly shed into the blood. CONCLUSIONS: This study demonstrates a novel benefit of the bispecific approach over a combination of monoclonal antibodies and supports the further development of FS118 for the treatment of cancer patients.