We previously reported that the inhibition of stearoyl‐CoA desaturase 1 (SCD1) enhances the antitumor function of CD8+ T cells indirectly via restoring production of DC recruiting chemokines by cancer cells and subsequent induction of antitumor CD8+ T cells. In this study, we investigated the molecular mechanism of direct enhancing effects of SCD1 inhibitors on CD8+ T cells. In vitro treatment of CD8+ T cells with SCD1 inhibitors enhanced IFN‐γ production and cytotoxic activity of T cells along with decreased oleic acid and esterified cholesterol, which is generated by cholesterol esterase, acetyl‐CoA acetyltransferase 1 (ACAT1), in CD8+ T cells. The addition of oleic acid or cholesteryl oleate reversed the enhanced functions of CD8+ T cells treated with SCD1 inhibitors. Systemic administration of SCD1 inhibitor to MCA205 tumor‐bearing mice enhanced IFN‐γ production of tumor‐infiltrating CD8+ T cells, in which oleic acid and esterified cholesterol, but not cholesterol, were decreased. These results indicated that SCD1 suppressed effector functions of CD8+ T cells through the increased esterified cholesterol in an ACAT1‐dependent manner, and SCD1 inhibition enhanced T cell activity directly through decreased esterified cholesterol. Finally, SCD1 inhibitors or ACAT1 inhibitors synergistically enhanced the antitumor effects of anti‐PD‐1 antibody therapy or CAR‐T cell therapy in mouse tumor models. Therefore, the SCD1–ACAT1 axis is regulating effector functions of CD8+ T cells, and SCD1 inhibitors, and ACAT1 inhibitors are attractive drugs for cancer immunotherapy.