Exhaustion represents a collection of programmed T cell differentiation states and an important mode of T cell dysfunction. T cell progression from progenitor to terminal exhaustion is associated with upregulation of the transcription factor TOX and expression of TIM3. Our understanding of factors regulating TOX expression and the transition from progenitor to terminal exhaustion, however, remains incomplete. We reveal here that T cell upregulation of tumor necrosis factor receptor type II (TNFR2) coincides with the gain of phenotypic markers and functions reflective of terminal exhaustion. Meanwhile, knocking out TNFR2 affords a novel population of T cells that express TIM3 but possess diminished TOX levels and functional characteristics of both progenitor and terminally exhausted cells. TIM3+TNFR2 KO T cells exhibit reduced exhaustion transcriptional programs and enhanced AP1 pathway signatures. Finally, TNFR2 KO mice demonstrate improved T cell-dependent control of tumor and chronic lymphocytic choriomeningitis viral (cLCMV) infection, while pharmacologic antagonism of TNFR2 licenses responses to checkpoint blockade in multiple tumor models.