Abstract The hypoxic tumor microenvironment has been implicated in immune escape, but the underlying mechanism remains elusive. Using an in vitro culture system modeling human T cell dysfunction and exhaustion in triple-negative breast cancer (TNBC), we find that hypoxia suppresses immune effector gene expression, including in T and NK cells, resulting in immune effector cell dysfunction and resistance to immunotherapy. We demonstrate that hypoxia-induced factor 1α (HIF1α) interaction with HDAC1 and concurrent PRC2 dependency causes chromatin remolding resulting in epigenetic suppression of effector genes and subsequent immune dysfunction. Targeting HIF1α and the associated epigenetic machinery can reverse the immune effector dysfunction and overcome resistance to PD-1 blockade, as demonstrated both in vitro and in vivo using syngeneic and humanized mice models. These findings identify a HIF1α-mediated epigenetic mechanism in immune dysfunction and provide a potential strategy to overcome immune resistance in TNBC.