CD25, the high-affinity interleukin-2 (IL-2) receptor α chain, is rapidly upregulated by antigen-specific CD8⁺ T cells after T cell receptor stimulation. Here, we demonstrate that during an acute viral infection, CD25 expression is quite dynamic—after initial upregulation, a subset of virus-specific T cells sustains CD25 expression longer than the rest. At this time when there is distinct heterogeneity in CD25 expression, examination of the in vivo fate of effector cells revealed that CD25^lo cells, which are relatively less sensitive to IL-2, preferentially upregulate CD127 and CD62L and give rise to functional long-lived memory cells. In contrast, CD25^hi cells perceiving prolonged IL-2 signals proliferate more rapidly, are prone to apoptosis, exhibit a more pronounced effector phenotype, and appear to be terminally differentiated. Consistent with this, sustained IL-2 receptor signaling during expansion drove terminal-effector differentiation. These data support the hypothesis that prolonged IL-2 signals during priming promote terminal-effector differentiation.