The treatment of high-grade tumours must consider a tumour environment dominated by cells that support cancer growth. In addition to directing angiogenesis and invasion, alternatively activated macrophages in the tumour provide protection from adaptive immunity and permit tumour growth. Agonist antibodies to the tumour necrosis factor receptor family member OX40 are an effective therapy for cancer in a range of murine models; however, as with many immune therapies, αOX40 therapy is less effective as the tumour grows and develops an immune suppressive environment. We demonstrate that αOX40 directly activates T cells and that this T-cell activation alters macrophage differentiation in the tumour environment. We demonstrate that macrophages in the tumour limit the efficacy of αOX40 therapy, and that combining αOX40 therapy with inhibitors of arginase significantly enhances survival of tumour-bearing mice. These data demonstrate that macrophages in the tumour environment limit the effectiveness of OX40-based immunotherapy, and combination therapies that target both the cell-mediated immune response and the suppressive tumour environment will be required for translation of effective immunotherapies to patients with established tumours.