T cell dysfunction is a characteristic feature of chronic viral infection and cancer. Recent studies in chronic lymphocytic choriomeningitis virus (LCMV) infection have defined a PD-1⁺ Tcf-1⁺ CD8⁺ T cell subset capable of self-renewal and differentiation into more terminally differentiated cells that downregulate Tcf-1 and express additional inhibitory molecules such as Tim3. Here, we demonstrated that expression of the glycoprotein CD101 divides this terminally differentiated population into two subsets. Stem-like Tcf-1⁺ CD8⁺ T cells initially differentiated into a transitory population of CD101⁻Tim3⁺ cells that later converted into CD101⁺ Tim3⁺ cells. Recently generated CD101⁻Tim3⁺ cells proliferated in vivo, contributed to viral control, and were marked by an effector-like transcriptional signature including expression of the chemokine receptor CX3CR1, pro-inflammatory cytokines, and granzyme B. PD-1 pathway blockade increased the numbers of CD101⁻Tim3⁺ CD8⁺ T cells, suggesting that these newly generated transitional cells play a critical role in PD-1-based immunotherapy.