The present disclosure describes an IHC assay for detecting and quantifying spatially proximal pairs of PD-1-expressing cells (PD-1+ cells) and PD-Ligand-expressing cells (PD-L+ cells) in tumor tissue, and the use of the assay to generate proximity biomarkers that are predictive of which cancer patients are most likely to benefit from treatment with a PD-1 antagonist. The disclosure also provides methods for testing tumor samples for the proximity biomarkers, as well as methods for treating subjects with a PD-1 antagonist based on the test results.