Bacillus Calmette-Guérin (BCG) is the only licensed vaccine for tuberculosis (TB), and is also used as an immunotherapy for bladder cancer and other malignancies due to its immunostimulatory properties. Mycobacteria spp., however, are well known for their numerous immune evasion mechanisms that limit the true potential of their therapeutic use. One such major mechanism is the induction of programmed death ligand-1 (PD-L1), which mitigates adaptive immune responses. Here, we sought to unravel the molecular pathways behind PD-L1 up-regulation on antigen-presenting cells (APCs) by BCG. We found that infection of APCs with BCG induced PD-L1 up-regulation, but that this did not depend on direct infection, suggesting a soluble mediator for this effect. BCG induced potent quantities of IL-6 and IL-10, and the downstream transcription factor STAT3 was hyper-phosphorylated. Intracellular analyses revealed that levels of PD-L1 molecules were associated with the STAT3 phosphorylation state, suggesting a causal link. Neutralisation of the IL-6 or IL-10 cytokine receptors dampened STAT3 phosphorylation and BCG-mediated up-regulation of PD-L1 on APCs. Pharmacological inhibition of STAT3 achieved the same effect, confirming an autocrine-paracrine cytokine loop as a mechanism for BCG-mediated up-regulation of PD-L1. Finally, an in vivo immunisation model showed that BCG vaccination under PD-L1 blockade could enhance antigen-specific memory CD4 T-cell responses. These novel findings could lead to refinement of BCG as both a vaccine for infectious disease and as a cancer immunotherapy.