Reinvigorating the function of exhausted CD8⁺ T cells during chronic viral infection and cancer is a major goal of current immunotherapy regimens. Here, we discuss recent advances in our understanding of exhausted CD8⁺ T cell heterogeneity as well as the potential differentiation trajectories that exhausted T cells follow during chronic infection and/or cancer. We highlight surmounting evidence suggesting that some T cell clones are divergent in nature and can develop into either terminally differentiated effector or exhausted CD8⁺ T cells. Lastly, we consider the potential therapeutic implications of such a bifurcation model of CD8⁺ T cell differentiation, including the intriguing hypothesis that redirecting progenitor CD8⁺ T cell differentiation along an effector pathway may serve as a novel approach to mitigate T cell exhaustion.