CD8⁺ T cells responding to chronic infections or tumors acquire an ‘exhausted’ state associated with elevated expression of inhibitory receptors, including PD-1, and impaired cytokine production. Exhausted T cells are continuously replenished by T cells with precursor characteristics that self-renew and depend on the transcription factor TCF1; however, their developmental requirements are poorly understood. In the present study, we demonstrate that high antigen load promoted the differentiation of precursor T cells, which acquired hallmarks of exhaustion within days of infection, whereas early effector cells retained polyfunctional features. Early precursor T cells showed epigenetic imprinting characteristic of T cell receptor–dependent transcription factor binding and were restricted to the generation of cells displaying exhaustion characteristics. Transcription factors BACH2 and BATF were key regulators with opposing functions in the generation of early precursor T cells. Overall, we demonstrate that exhaustion manifests first in TCF1⁺ precursor T cells and is propagated subsequently to the pool of antigen-specific T cells.