T cell dysfunctionality prevents clearance of chronic infections and cancer. Furthermore, epigenetic programming in dysfunctional CD8+ T cells limits durable responses to T cell-based immunotherapies, including immune checkpoint blockade (ICB). However, major gaps concern how upstream signals drive acquisition of dysfunctional epigenetic programs, and whether therapeutically targeting these signals can remodel terminally dysfunctional T cells to an ICB-responsive state. Here, we use an in vitro model of human T cell dysfunction and complementary in vivo mouse chronic virus infection and tumor models. We show that post-effector TGFβ1 signaling establishes terminal dysfunction in human CD8+ T cells through stable epigenetic changes. Importantly, we demonstrate that promoting BMP signaling while blocking TGFβ1 restored effector and memory programs in dysfunctional human CD8+ T cells, induced superior anti-tumor activity, and boosted ICB responses during mouse chronic virus infection. Thus, rebalancing TGFβ1/BMP-signals in dysfunctional CD8+ T cells provides an exciting new approach to enhance T cell immunotherapies.  Overall design: In vitro chronic TCR stimulation of cord-blood derived human CD8+ T cells