Pancreatic cancer is a particularly lethal malignancy that resists immunotherapy. In this study, using a preclinical pancreatic cancer murine model, we demonstrate a progressive decrease in IFN-γ and granzyme B and a concomitant increase in Tox and IL-10 in intratumoral tumor-specific T cells. Intratumoral myeloid cells produced elevated IL-27, a cytokine that correlates with poor patient outcome. Abrogating IL-27 signaling significantly decreased intratumoral Tox+ T cells and delayed tumor growth yet was not curative. Agonistic αCD40 decreased intratumoral IL-27–producing myeloid cells, decreased IL-10–producing intratumoral T cells, and promoted intratumoral Klrg1+ Gzmb+ short-lived effector T cells. Combination agonistic αCD40+ αPD-L1 cured 63% of tumor-bearing animals, promoted rejection following tumor rechallenge, and correlated with a 2-log increase in pancreas-residing tumor-specific T cells. Interfering with Ifngr1 expression in nontumor/host cells abrogated agonistic αCD40+ αPD-L1 efficacy. In contrast, interfering with nontumor/host cell Tnfrsf1a led to cure in 100% of animals following agonistic αCD40+ αPD-L1 and promoted the formation of circulating central memory T cells rather than long-lived effector T cells. In summary, we identify a mechanistic basis for T cell exhaustion in pancreatic cancer and a feasible clinical strategy to overcome it.