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. Display omitted •Mouse and human tumors harbor relatively undifferentiated Tcf1+PD-1+CD8+ T cells•These intratumoral cells have expansion, regeneration, and differentiation capacity•They produce differentiated Tcf1−PD-1+CD8+ T cells in response to immunotherapy•These stem-like cells are critical for tumor control in response to immunotherapy Since chronic activation promotes terminal T cell differentiation (exhaustion), it has remained unclear how checkpoint blockade mediates a proliferative response of tumor-infiltrating T cells. Siddiqui et al. identify intratumoral, tumor-reactive Tcf1+PD-1+CD8+ T cells that display stem-like properties and that promote tumor control in response to vaccination and checkpoint blockade immunotherapy.