Tumor antigen–specific T cells are found within melanomas, yet tumors continue to grow. Although the tumor microenvironment is thought to influence the suppression of tumor-reactive T cells, the underlying mechanisms for this T-cell dysfunction are not clear. Here, we report that the majority of tumor infiltrating T lymphocytes (TIL), including MART-1/Melan-A melanoma antigen–specific CD8 T cells, predominantly expressed PD-1, in contrast to T cells in normal tissues and peripheral blood T lymphocytes (PBL). PD-1⁺ TIL expressed CTLA-4 and Ki-67, markers that were not expressed by PD-1⁻ TIL and T cells in the normal tissues and PBL. Moreover, PD-1⁺ TIL were primarily HLA-DR⁺ and CD127⁻, in contrast to PD-1⁻ TIL. Effector cytokine production by PD-1⁺ TIL was impaired compared with PD-1⁻ TIL and PBL. Collectively, the phenotypic and functional characterizations of TIL revealed a significantly higher frequency and level of PD-1 expression on TIL compared with normal tissue T-cell infiltrates and PBL, and PD-1 expression correlated with an exhausted phenotype and impaired effector function. These findings suggest that the tumor microenvironment can lead to up-regulation of PD-1 on tumor-reactive T cells and contribute to impaired antitumor immune responses.