CD8(+) T cells controlling pathogens or tumors must function at sites where oxygen tension is frequently low, and never as high as under atmospheric culture conditions. However, T-cell function in vivo is generally analyzed indirectly, or is extrapolated from in vitro studies under nonphysiologic oxygen tensions. In this study, we delineate the role of physiologic and pathologic oxygen tension in vitro during reactivation and differentiation of tumor-specific CD8(+) T cells. Using CD8(+) T cells from pmel-1 mice, we observed that the generation of CTLs under 5% O2, which corresponds to physioxia in lymph nodes, gave rise to a higher effector signature than those generated under atmospheric oxygen fractions (21% O2). Hypoxia (1% O2) did not modify cytotoxicity, but decreasing O2 tensions during CTL and CD8(+) tumor-infiltrating lymphocyte reactivation dose-dependently decreased proliferation, induced secretion of the immunosuppressive cytokine IL-10, and upregulated the expression of CD137 (4-1BB) and CD25. Overall, our data indicate that oxygen tension is a key regulator of CD8(+) T-cell function and fate and suggest that IL-10 release may be an unanticipated component of CD8(+) T cell-mediated immune responses in most in vivo microenvironments.