ABSTRACT Background Adoptive cell therapy (ACT) is a promising strategy for treating cancer, yet it faces several challenges such as lack of long term protection due to T cell exhaustion induced by chronic TCR stimulation in the tumor microenvironment. One benefit of ACT, however, is that it allows for cellular manipulations, such as deletion of the phosphotyrosine phosphatase non-receptor type 22 (PTPN22), which improves CD8 + T cell anti-tumor efficacy in ACT. We tested whether Ptpn22 KO cytolytic T cells (CTL) were also more effective than Ptpn22 WT CTL in controlling tumors in scenarios that favor T cell exhaustion. Methods Tumor control by Ptpn22 WT and Ptpn22 KO CTL was assessed following adoptive transfer of low numbers of CTL to mice with subcutaneously implanted MC38 tumors. Tumor infiltrating lymphocytes were isolated for analysis of effector functions. An in vitro assay was established to compare CTL function in response to acute and chronic re-stimulation with antigen-pulsed tumor cells. The expression of effector and exhaustion-associated proteins by Ptpn22 WT and Ptpn22 KO T cells was followed over time in vitro and in vivo using the ID8 tumor model. Finally, the effect of PD-1 and TIM-3 blockade on Ptpn22 KO CTL tumor control was assessed using monoclonal antibodies and CRISPR/Cas9-mediated knockout. Results Despite having improved effector function at the time of transfer, Ptpn22 KO CTL became more exhausted than Ptpn22 WT CTL, characterized by more rapid loss of effector functions, and earlier and higher expression of inhibitory receptors (IRs), particularly the terminal exhaustion marker TIM-3. TIM-3 expression, under the control of the transcription factor NFIL3, was induced by IL-2 signaling which was enhanced in Ptpn22 KO cells. Anti-tumor responses of Ptpn22 KO CTL were improved following PD-1 blockade in vivo , yet knockout or antibody-mediated blockade of TIM-3 did not improve but further impaired tumor control, indicating TIM-3 signaling itself did not drive the diminished function seen in Ptpn22 KO CTL. Conclusions This study questions whether TIM-3 plays a role as an IR and highlights that genetic manipulation of T cells for ACT needs to balance short term augmented effector function against the risk of T cell exhaustion in order to achieve longer term protection. What is already known on this topic T cell exhaustion in the tumor microenvironment is a major factor limiting the potential success of adoptive cell therapy (ACT) in the treatment of solid tumors. Deletion of the phosphatase PTPN22 in CD8 + T cells improves their response to tumors, but it is not known whether this influences development of exhaustion. What this study adds Under conditions which promote exhaustion, CTL lacking PTPN22 exhaust more rapidly than WT cells, despite displaying enhanced effector function in their initial response to antigen. Ptpn22 KO CTL express high levels of the inhibitory receptor TIM-3, but TIM-3 signaling does not directly contribute to Ptpn22 KO CTL dysfunction. Ptpn22 KO T cells are more responsive to IL-2 through JAK-STAT signaling, which induces TIM-3 expression via the transcription factor NFIL3. How this study might affect research, practice or policy Strategies aimed at augmenting T cell effector function for ACT should balance improved responses against an increased risk of T cell exhaustion.