Checkpoint blockade mediates a proliferative response of tumor-infiltrating CD8⁺ T lymphocytes (TILs). The origin of this response has remained elusive because chronic activation promotes terminal differentiation or exhaustion of tumor-specific T cells. Here we identified a subset of tumor-reactive TILs bearing hallmarks of exhausted cells and central memory cells, including expression of the checkpoint protein PD-1 and the transcription factor Tcf1. Tcf1⁺PD-1⁺ TILs mediated the proliferative response to immunotherapy, generating both Tcf1⁺PD-1⁺ and differentiated Tcf1⁻PD-1⁺ cells. Ablation of Tcf1⁺PD-1⁺ TILs restricted responses to immunotherapy. Tcf1 was not required for the generation of Tcf1⁺PD-1⁺ TILs but was essential for the stem-like functions of these cells. Human TCF1⁺PD-1⁺ cells were detected among tumor-reactive CD8⁺ T cells in the blood of melanoma patients and among TILs of primary melanomas. Thus, immune checkpoint blockade relies not on reversal of T cell exhaustion programs, but on the proliferation of a stem-like TIL subset.