Tumor cells reprogram their metabolism to produce specialized metabolites that both fuel their own growth and license tumor immune evasion. However, the relationships between these functions remain poorly understood. Here, we report CRISPR screens in a mouse model of colo-rectal cancer (CRC) that implicates the dual specificity phosphatase 18 (DUSP18) in the establishment of tumor-directed immune evasion. Dusp18 inhibition reduces CRC growth rates, which correlate with high levels of CD8+ T cell activation. Mechanistically, DUSP18 dephosphorylates and stabilizes the USF1 bHLH-ZIP transcription factor. In turn, USF1 induces the SREBF2 gene, which allows cells to accumulate the cholesterol biosynthesis intermediate lanosterol and release it into the tumor microenvironment (TME). There, lanosterol uptake by CD8+ T cells suppresses the mevalonate pathway and reduces KRAS protein prenylation and function, which in turn inhibits their activation and establishes a molecular basis for tumor cell immune escape. Finally, the combination of an anti-PD-1 antibody and Lumacaftor, an FDA-approved small molecule inhibitor of DUSP18, inhibits CRC growth in mice and synergistically enhances anti-tumor immunity. Collectively, our findings support the idea that a combination of immune checkpoint and metabolic blockade represents a rationally-designed, mechanistically-based and potential therapy for CRC.