Treatment with combined immune checkpoint blockade (CICB) targeting CTLA-4 and PD-1 is associated with clinical benefit in many tumour types but has significant toxicity. Insights into biomarkers and mechanisms of response and toxicity to CICB are needed. We profiled the blood, tumour and gut microbiome of 77 patients with advanced melanoma treated with CICB, who experienced a high rate of any ≥grade 3 immune-related adverse events (49%) and performed parallel studies in pre-clinical models. Tumour-associated immune and genomic biomarkers of response to CICB were similar to those identified for ICB monotherapy, and toxicity from CICB was associated with a more diverse peripheral T-cell repertoire. Profiling of gut microbiota demonstrated a significantly higher abundance of Bacteroides intestinalis in patients with toxicity, with upregulation of mucosal IL-1β in patient samples of colitis and in pre-clinical models. Gut microbial or cytokine manipulation offer potential new therapeutic angles for targeting toxicity of cancer immunotherapy.