LYP-IN-3 (compound D34) is a selective inhibitor of Lymphoid-tyrosine phosphatase (LYP) (Ki=0.93 μM), and regulates T-cell receptor (TCR) signaling pathway in tumor progress. LYP-IN-3 activates T-cell and inhibits M2 macrophage polarization, but upregulates PD-1/PD-L1 expression. LYP-IN-3 can be leveraged with PD-1/PD-L1 inhibitor, for futher cancer immunotherapy.