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.