In chronic infections and cancer, T cells are exposed to prolonged antigen stimulation, resulting in loss of function (or exhaustion) and impairment of effective immunological protection. Exhausted T cells are heterogeneous and include early progenitors (Tpex) and terminally exhausted cells (Tex). Here, we used bulk and single-cell transcriptomics to analyze expression of transposable elements (TEs) in subpopulations of mouse and human CD8+ tumor-infiltrating T lymphocytes (TILs). We show that in mice, members of the virus-like murine VL30 TE family (mostly intact, evolutionary young ERV1s) are strongly repressed in terminally exhausted CD8+ T cells in both tumor and viral models of exhaustion. Tpex expression of these VL30s, which are mainly intergenic and transcribed independently of their closest gene neighbors, was driven by Fli1, a transcription factor involved in progression from Tpex to Tex. Immune checkpoint blockade (ICB) in both mice and patients with cancer increased TE expression (including VL30 in mice), demonstrating that TEs may be applicable as ICB response biomarkers. We conclude that expression of TEs is tightly regulated in TILs during establishment of exhaustion and reprogramming by ICB. Analyses of TE expression on single cells and bulk populations open opportunities for understanding immune cell identity and heterogeneity, as well as for defining cellular gene expression signatures and disease biomarkers.