This could lead to new treatments for aggressive advanced cancer and other diseases, says lead investigator Professor Mark Smyth.
The crux of the discovery is an improved understanding of how protective white blood cells, known as natural killer cells, discriminate between harmless cells and disease.
"It tells us something that we did not know before. It also has implications for viruses," says Professor Smyth, of the QIMR Berghofer Research Institute in Queensland.
"Essentially it shows how cancer hijacks the system of immune recognition and activation, allowing the cancer to spread through the body.
"I'm very excited. I have spent a large part my career trying to convince people the immune system reacts against cancer."
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He adds: "Our work is an important but small part of a big picture.
"Immunotherapy has revolutionised cancer treatment. Some people are walking away from treatment disease free."
At the centre of Professor Smyth's discovery is a protein known as CD96, which is found on disease-fighting white blood cells but which was not previously understood.
Its function is to prevent killer cells from attacking normal healthy tissue.
However, Professor Smyth has discovered cancer cells express a molecule, recognised by CD96, that blocks the killer cells from reacting.
So far the team have proved the theory in laboratory experiments. The next step is to test it on human cells.
If that works it makes sense to develop an antibody to block human CD96, says Professor Smyth, whose discovery is published in the journal Nature Immunology.
"If all goes to plan we can take the next steps towards human trials."
QIMR Berghofer director Professor Frank Gannon is delighted by the progress, which he says is the result of many years of work.
"With immunotherapy we are on the cusp of a whole new way of treating cancer. And QIMR Berghofer is a world leader in this.
"It's the most exciting thing I have seen in the past 20 years."
Human trials are possible within five years, Professor Gannon says.
"Patients will benefit hugely from the insights in this study.
"It is a fairly direct route from the laboratory to the clinic."
