A common metabolic alteration in the tumor microenvironment (TME) is lipid accumulation, a feature associated with immune dysfunction. Here, we examined how CD8⁺ tumor infiltrating lymphocytes (TILs) respond to lipids within the TME. We found elevated concentrations of several classes of lipids in the TME and accumulation of these in CD8⁺ TILs. Lipid accumulation was associated with increased expression of CD36, a scavenger receptor for oxidized lipids, on CD8⁺ TILs, which also correlated with progressive T cell dysfunction. Cd36^−/− T cells retained effector functions in the TME, as compared to WT counterparts. Mechanistically, CD36 promoted uptake of oxidized low-density lipoproteins (OxLDL) into T cells, and this induced lipid peroxidation and downstream activation of p38 kinase. Inhibition of p38 restored effector T cell functions in vitro, and resolution of lipid peroxidation by overexpression of glutathione peroxidase 4 restored functionalities in CD8⁺ TILs in vivo. Thus, an oxidized lipid-CD36 axis promotes intratumoral CD8⁺ T cell dysfunction and serves as a therapeutic avenue for immunotherapies.