Abstract Thyroid cancer (TC), as the most common endocrine malignancy, has exhibited a significant increasing trend in incidence in China and globally, with papillary thyroid cancer (PTC) being the most common pathological type. However, the molecular mechanisms driving the initiation and progression of TC remains scarce, posing a bottleneck problem for the precise diagnosis and treatment. Tumors, as a complex heterogeneous composite consisting of tumor cells, immune cells, and stromal cells, have long been considered to play a key role in driving tumor occurrence and malignant progression through the proportion, spatial distribution, and interaction of tumor cells and immune cells in the tumor immune microenvironment(TIME).We performed single-cell RNA sequencing (scRNA-seq) on 16 clinical samples, including normal thyroid tissue, benign nodules, PTC, and PTC with cervical lymph node metastasis(LNM), delineating the cell atlas of the tumor microenvironment (TME) at various stages from normal thyroid to PTC development. Among these, we discovered a previously undefined TNFSF9highCD8+ T cell subset with a distinct transcriptional profile from classical exhausted T cells, which was highly enriched in PTC tumor tissues. Further cell interaction analysis revealed that the highly expressed CD97 receptor on these CD8+ T cells binds to the highly expressed CD55 molecule on PTC tumor cells, promoting the exhaustion of CD8+ T cells, suggesting that CD97/CD55 may be a key new immune checkpoint (IC) inducing CD8+ T cell exhaustion and promoting immune escape of PTC tumor cells. We validated the co-localization of CD97/CD55-mediated CD8+ T cell and tumor cell interactions in PTC patient specimens and spontaneous tumor samples from a mouse PTC model using multiplex immunofluorescence (mIHC). Flow cytometry analysis of the proportion of CD97+ CD8+ T cells in patient and mouse specimens revealed a significant increase in the proportion of CD97+ CD8+ T cells in PTC tumor tissues. Co-culture experiments of activated and expanded CD8+ T cells from peripheral blood mononuclear cells(PBMC) of PTC patients with PTC tumor cells showed that CD55 overexpressing tumor cells inhibited the secretion of cytotoxic cytokines IFN-γ and IL-2 by activated CD8+ T cells through the CD97/CD55 IC signal, thereby weakening the cytotoxity on PTC tumor cells. In summary, the IC regulatory signal formed by the highly expressed CD55 molecule on the surface of PTC tumors and the CD97 receptor on the surface of PTC-specific inhibitory TNFSF9highCD8+ T cells can reshape the TIME, promoting the formation of an immunosuppressive microenvironment, which may represent a novel molecular mechanism promoting immune escape of tumor cells during PTC initiation and progression. Citation Format: Xuan Qin, Jia Li, Dapeng Li, Xing Wan, Xianhui Ruan, Yimeng Liu, Weijing Hao, Kejia Xu, Yi Shi, Yongjun Piao, Xiangqian Zheng. A novel immune checkpoint CD97/CD55 in the initiation and progression of papillary thyroid cancer by scRNA-seq [abstract]. In: Proceedings of the American Association for Cancer Research Annual Meeting 2024; Part 1 (Regular Abstracts); 2024 Apr 5-10; San Diego, CA. Philadelphia (PA): AACR; Cancer Res 2024;84(6_Suppl):Abstract nr 6859.