Biliary tract cancers demonstrate profound therapeutic resistance, and broadly effective therapies for refractory disease are lacking. We conducted a single-arm, second-line phase II trial combining DKN-01, a humanized monoclonal antibody targeting Dickkopf-1 (DKK-1), and nivolumab to treat patients with advanced biliary tract cancer (NCT04057365). No objective responses were seen. To identify mechanisms of treatment failure, we analyzed paired pre-treatment and on-treatment biopsies using scRNA-seq and constructed a detailed molecular classification of malignant and immune cells. We annotated five biliary tract cancer malignant cell states: classical, basal, mesenchymal, neural-like, and endothelial-like. Neural-like and endothelial-like states, which drive therapeutic resistance in other cancers, have not previously been described in BTC. Malignant cell states co-varied with distinct immune cell states, revealing diverse mechanisms of myeloid and T-cell mediated immune suppression, including M2 myeloid and terminally exhausted T cell programs that were induced by DKN-01/nivolumab. Here, we provide the first systematic classification of functionally annotated cell states in biliary tract cancer and provide new insight into resistance mechanisms to an immunotherapy combination that can inform the next generation of trials.