Expansion of antigen-experienced CD8+ T cells is critical for the success of tumour-infiltrating lymphocyte (TIL)-adoptive cell therapy (ACT) in patients with cancer1. Interleukin-2 (IL-2) acts as a key regulator of CD8+ cytotoxic T lymphocyte functions by promoting expansion and cytotoxic capability2,3. Therefore, it is essential to comprehend mechanistic barriers to IL-2 sensing in the tumour microenvironment to implement strategies to reinvigorate IL-2 responsiveness and T cell antitumour responses. Here we report that prostaglandin E2 (PGE2), a known negative regulator of immune response in the tumour microenvironment4,5, is present at high concentrations in tumour tissue from patients and leads to impaired IL-2 sensing in human CD8+ TILs via the PGE2 receptors EP2 and EP4. Mechanistically, PGE2 inhibits IL-2 sensing in TILs by downregulating the IL-2Rγc chain, resulting in defective assembly of IL-2Rβ-IL2Rγc membrane dimers. This results in impaired IL-2-mTOR adaptation and PGC1α transcriptional repression, causing oxidative stress and ferroptotic cell death in tumour-reactive TILs. Inhibition of PGE2 signalling to EP2 and EP4 during TIL expansion for ACT resulted in increased IL-2 sensing, leading to enhanced proliferation of tumour-reactive TILs and enhanced tumour control once the cells were transferred in vivo. Our study reveals fundamental features that underlie impairment of human TILs mediated by PGE2 in the tumour microenvironment. These findings have therapeutic implications for cancer immunotherapy and cell therapy, and enable the development of targeted strategies to enhance IL-2 sensing and amplify the IL-2 response in TILs, thereby promoting the expansion of effector T cells with enhanced therapeutic potential.