Understanding the mechanisms underlying how T cells become dysfunctional in a tumor microenvironment (TME) will greatly benefit cancer immunotherapy. We found that increased CD36 expression in tumor-infiltrating CD8⁺ T cells, which was induced by TME cholesterol, was associated with tumor progression and poor survival in human and murine cancers. Genetic ablation of Cd36 in effector CD8⁺ T cells exhibited increased cytotoxic cytokine production and enhanced tumor eradication. CD36 mediated uptake of fatty acids by tumor-infiltrating CD8⁺ T cells in TME, induced lipid peroxidation and ferroptosis, and led to reduced cytotoxic cytokine production and impaired antitumor ability. Blocking CD36 or inhibiting ferroptosis in CD8⁺ T cells effectively restored their antitumor activity and, more importantly, possessed greater antitumor efficacy in combination with anti-PD-1 antibodies. This study reveals a new mechanism of CD36 regulating the function of CD8⁺ effector T cells and therapeutic potential of targeting CD36 or inhibiting ferroptosis to restore T cell function.