The development of dysfunctional or exhausted T cells is characteristic of immune responses to chronic viral infections and cancer. Exhausted T cells are defined by reduced effector function, sustained upregulation of multiple inhibitory receptors, an altered transcriptional program and perturbations of normal memory development and homeostasis. This review focuses on (a) illustrating milestone discoveries that led to our present understanding of T cell exhaustion, (b) summarizing recent developments in the field, and (c) identifying new challenges for translational research. Exhausted T cells are now recognized as key therapeutic targets in human infections and cancer. Much of our knowledge of the clinically relevant process of exhaustion derives from studies in the mouse model of Lymphocytic choriomeningitis virus (LCMV) infection. Studies using this model have formed the foundation for our understanding of human T cell memory and exhaustion. We will use this example to discuss recent advances in our understanding of T cell exhaustion and illustrate the value of integrated mouse and human studies and will emphasize the benefits of bi-directional mouse-to-human and human-to-mouse research approaches.