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In chronic infections and cancer, T cells are exposed to prolonged antigen stimulation, resulting in loss of function (or exhaustion) and impairment of effective immunological protection. Exhausted T cells are heterogeneous and include early progenitors (Tpex) and terminally exhausted cells (Tex). Here, we used bulk and single-cell transcriptomics to analyze expression of transposable elements (TEs) in subpopulations of mouse and human CD8+ tumor-infiltrating T lymphocytes (TILs). We show that in mice, members of the virus-like murine VL30 TE family (mostly intact, evolutionary young ERV1s) are strongly repressed in terminally exhausted CD8+ T cells in both tumor and viral models of exhaustion. Tpex expression of these VL30s, which are mainly intergenic and transcribed independently of their closest gene neighbors, was driven by Fli1, a transcription factor involved in progression from Tpex to Tex. Immune checkpoint blockade (ICB) in both mice and patients with cancer increased TE expression (including VL30 in mice), demonstrating that TEs may be applicable as ICB response biomarkers. We conclude that expression of TEs is tightly regulated in TILs during establishment of exhaustion and reprogramming by ICB. Analyses of TE expression on single cells and bulk populations open opportunities for understanding immune cell identity and heterogeneity, as well as for defining cellular gene expression signatures and disease biomarkers. Editor's summary: Transposable elements (TEs) are non–protein-coding DNA sequences capable of moving throughout the genome and composing nearly 50% of genomic DNA, but their function in T cells remains unclear. By analyzing bulk and single cell transcriptomics, Bonté et al. explored the expression and regulation of TEs during the establishment of T cell exhaustion. In mouse tumor and chronic viral infection models, TEs belonging to the VL30 family were highly repressed in terminally exhausted tumor-infiltrating T cells and controlled by the transcription factor Fli1. In human tumors, TE expression patterns were associated with the state of T cell exhaustion and reprogrammed by anti–PD-1 immunotherapy. These findings demonstrate that TE expression is tightly regulated during the progression of T cell exhaustion and could improve the accuracy of T cell gene signatures. —Claire Olingy [ABSTRACT FROM AUTHOR]