T cell expression of inhibitory proteins can be a critical component for the regulation of immunopathology owing to self-reactivity or potentially exuberant responses to pathogens, but it may also limit T cell responses to some malignancies, particularly if the tumor Ag being targeted is a self-protein. We found that the abrogation of Src homology region 2 domain-containing phosphatase-1 (SHP-1) in tumor-reactive CD8+ T cells improves the therapeutic outcome of adoptive immunotherapy in a mouse model of disseminated leukemia, with benefit observed in therapy employing transfer of CD8+ T cells alone or in the context of also providing supplemental IL-2. SHP-1−/− and SHP-1+/+ effector T cells were expanded in vitro for immunotherapy. Following transfer in vivo, the SHP-1−/− effector T cells exhibited enhanced short-term accumulation, followed by greater contraction, and they ultimately formed similar numbers of long-lived, functional memory cells. The increased therapeutic effectiveness of SHP-1−/− effector cells was also observed in recipients that expressed the tumor Ag as a self-antigen in the liver, without evidence of inducing autoimmune toxicity. SHP-1−/− effector CD8+ T cells expressed higher levels of eomesodermin, which correlated with enhanced lysis of tumor cells. Furthermore, reduction of SHP-1 expression in tumor-reactive effector T cells by retroviral transduction with vectors that express SHP-1–specific small interfering RNA, a translatable strategy, also exhibited enhanced antitumor activity in vivo. These studies suggest that abrogating SHP-1 in effector T cells may improve the efficacy of tumor elimination by T cell therapy without affecting the ability of the effector cells to persist and provide a long-term response.