T cell dysfunction is a characteristic feature of chronic viral infection and cancer. Recent studies in chronic lymphocytic choriomeningitis virus (LCMV) infection have defined a PD-1+ Tcf-1+ CD8+ T cell subset capable of self-renewal and differentiation into more terminally differentiated cells that downregulate Tcf-1 and express additional inhibitory molecules such as Tim3. Here, we demonstrated that expression of the glycoprotein CD101 divides this terminally differentiated population into two subsets. Stem-like Tcf-1+ CD8+ T cells initially differentiated into a transitory population of CD101−Tim3+ cells that later converted into CD101+ Tim3+ cells. Recently generated CD101−Tim3+ cells proliferated in vivo, contributed to viral control, and were marked by an effector-like transcriptional signature including expression of the chemokine receptor CX3CR1, pro-inflammatory cytokines, and granzyme B. PD-1 pathway blockade increased the numbers of CD101−Tim3+ CD8+ T cells, suggesting that these newly generated transitional cells play a critical role in PD-1-based immunotherapy. Display omitted •CX3CR1+ CD8+ T cells are recent progeny of stem-like cells in chronic infection•CX3CR1+ cells differentiate to a dysfunctional state marked by CD101 expression•Transitory CX3CR1+ cells express effector molecules and contribute to viral control•PD-1 pathway blockade increases the number of antigen-specific transitory cells Chronic viral infection induces exhaustion of antigen-specific T cells. Hudson and colleagues define a transitory, effector-like population of CD8+ T cells that are recently generated from stem-like CD8+ T cells in chronic infection. These transitory cells contribute to viral control and are increased in number following PD-1 pathway blockade.