Background: The application of immune checkpoint inhibitors (ICIs) has revolutionarily improved the prognosis of patients with lung squamous cell carcinoma (LUSC) with limited treatment options, yet only certain patients can benefit from ICIs. S100A7 has been reported to accelerate tumor progression by activating oncogenic pathway in LUSC. Here, we aimed to deepen in the role played by S100A7 in the tumor immune microenvironment (TIME) and immunotherapeutic efficacy. Methods: Immunohistochemical analysis of PD-L1 expression and CD8⁺ tumor infiltrating lymphocytes (TILs) was applied to investigate the correlation between S100A7 expression and TIME. The mechanism of S100A7 regulating PD-L1 expression and infiltration of CD8⁺ TILs was then explored. Based on a mouse model and a clinical cohort, the association between S100A7 expression and the efficacy of ICIs was also analyzed. Results: Immunohistochemical analysis of 102 LUSC specimens revealed that S100A7 expression negatively corelated with PD-L1 expression and the infiltration of CD8⁺ TILs. The in vitro studies showed that S100A7 deregulated PD-L1 expression by activating the p-AKT pathway. Notably, a negative correlation between S100A7 expression and CXCL9 expression in tumor cell and CD68⁺ macrophage was observed in LUSC samples, which may lead to a decrease in CD8⁺ TILs. Results of murine models of LUSC revealed that dysregulation of S100A7 exerted an impact on anti-tumor response of immunotherapy. Further analysis showed that targeting S100A7 may enhance the efficacy of immunotherapy by yielding an inflammatory phenotype. In addition, baseline plasma level of S100A7 was higher in patients with progressive disease (p = 0.0393) based on our cohort of LUSC patients treated with ICIs. The potential predictive value of baseline plasma level of S100A7 for immunotherapy response was then confirmed with area under curve up to 0.869. Multivariate Cox regression analyses revealed that baseline S100A7 level in plasma samples was an independent prognostic factor. Conclusions: This study deepened in the understanding of the role played by S100A7 in the TIME, offering a novel insight of its mechanism of action on immunotherapy resistance. Our results indicated that S100A7 may emerge as a powerful predictive tool for immunotherapy and the treatment targeting S100A7 may be beneficial for immunotherapy in LUSC.