Glioblastoma (GBM) is a lethal disease with no effective therapies available. We previously observed upregulation of the TAM (Tyro-3, Axl, and Mer) receptor tyrosine kinase family member AXL in mesenchymal GBM and showed that knockdown of AXL induced apoptosis of mesenchymal, but not proneural, glioma sphere cultures (GSC). In this study, we report that BGB324, a novel small molecule inhibitor of AXL, prolongs the survival of immunocompromised mice bearing GSC-derived mesenchymal GBM-like tumors. We show that protein S (PROS1), a known ligand of other TAM receptors, was secreted by tumor-associated macrophages/microglia and subsequently physically associated with and activated AXL in mesenchymal GSC. PROS1-driven phosphorylation of AXL (pAXL) induced NFkB activation in mesenchymal GSC, which was inhibited by BGB324 treatment. We also found that treatment of GSC-derived mouse GBM tumors with nivolumab, a blocking antibody against the immune checkpoint protein PD-1, increased intratumoral macrophages/microglia and activation of AXL. Combinatorial therapy with nivolumab plus BGB324 effectively prolonged the survival of mice bearing GBM tumors. Clinically, expression of AXL or PROS1 was associated with poor prognosis for patients with GBM. Our results suggest that the PROS1–AXL pathway regulates intrinsic mesenchymal signaling and the extrinsic immune microenvironment, contributing to the growth of aggressive GBM tumors. Significance: These findings suggest that development of combination treatments of AXL and immune checkpoint inhibitors may provide benefit to patients with GBM.