PD-L1 (programmed death ligand 1, B7-H1) is a cell surface glycoprotein that can impair T-cell function. PD-L1 is aberrantly expressed by multiple human malignancies and has been shown to carry a highly unfavorable prognosis in patients with kidney cancer. The role of PD-L1 was evaluated as a mechanism for local stage progression in urothelial carcinoma (UC) of the bladder. Using immunohistochemistry, PD-L1 expression was evaluated in a cohort of 280 high-risk UCs of the bladder. PD-L1 was modeled as a predictor of bladder cancer stage using ordinal logistic regression. Other covariates evaluated as potential confounders included age, gender, tumor grade, and lymphocytic infiltration. Further, PD-L1 was evaluated as a potential mechanism of bacillus Calmette-Guerin (BCG) failure in the subset of high-risk nonmuscle-invasive tumors that received this treatment. PD-L1 expression was observed in 7% of pTa, 16% of pT1, 23% of pT2, 30% of pT3/4, and 45% of carcinoma in situ (CIS) tumors. PD-L1 expression was associated with high-grade tumors (odds ratio [OR] = 2.4, P = .009) and tumor infiltration by mononuclear cells (OR = 5.5, P = .004). We observed that the key determinants of stage progression in this cohort were World Health Organization/International Society of Urologic Pathology (WHO/ISUP) high-grade tumor pathology (OR = 4.77, 95% confidence interval [CI]: 2.73-8.34; P < .001) and PD-L1 expression (OR = 2.20, P = .012). PD-L1 expression was found to be extremely abundant in the BCG-induced bladder granulomata in 11 of 12 patients failing BCG treatment. Collectively, these data indicate that tumor PD-L1 may facilitate localized stage-advancement of UC and attenuate responses to BCG immunotherapy by neutralizing T cells that normally guard against cancer invasion from the epithelium into the bladder musculature.