Intratumoral T cells play a central role in anti-tumor immunity, and the balance between T effector cells (Teff) and regulatory T cells (Treg) affects the prognosis of cancer patients. However, educated by tumor microenvironment, T cells frequently fail in their responsibility. In this study, we aimed to investigate the role of truncated isoform of protein tyrosine phosphatase receptor-type O (PTPROt) in T cell-mediated anti-tumor immunity. We recruited 70 hepatocellular carcinoma (HCC) patients and 30 healthy volunteers for clinical investigation, and analyzed cellular tumor immunity by using ptpro−/− C57BL/6 mice and NOD/SCID mice. PTPROt expression was significantly downregulated in human HCC-infiltrating T cells due to the hypoxia microenvironment; PTPROt expression highly correlated with the intratumoral Teff/Treg ratio and clinicopathologic characteristics. Moreover, PTPROt deficiency attenuated T cell-mediated anti-tumor immunity and remarkably promoted mouse HCC growth. Mechanistically, deletion of PTPROt decreased Teff quantity and quality through phosphorylation of lymphocyte-specific tyrosine kinase, but increased Treg differentiation through phosphorylation of signal transducer and activator of transcription 5. In support of the Teff/Treg homeostasis, PTPROt serves as an important tumor suppressor in HCC microenvironment.