T cell exhaustion limits anti-tumor immunity and responses to immunotherapy. Here, we explored the microenvironmental signals regulating T cell exhaustion using a model of chronic lymphocytic leukemia (CLL). Single-cell analyses identified a subset of PD-1^hi, functionally impaired CD8⁺ T cells that accumulated in secondary lymphoid organs during disease progression and a functionally competent PD-1^int subset. Frequencies of PD-1^int TCF-1⁺ CD8⁺ T cells decreased upon Il10rb or Stat3 deletion, leading to accumulation of PD-1^hi cells and accelerated tumor progression. Mechanistically, inhibition of IL-10R signaling altered chromatin accessibility and disrupted cooperativity between the transcription factors NFAT and AP-1, promoting a distinct NFAT-associated program. Low IL10 expression or loss of IL-10R-STAT3 signaling correlated with increased frequencies of exhausted CD8⁺ T cells and poor survival in CLL and in breast cancer patients. Thus, balance between PD-1^hi, exhausted CD8⁺ T cells and functional PD-1^int TCF-1⁺ CD8⁺ T cells is regulated by cell-intrinsic IL-10R signaling, with implications for immunotherapy.