Tumor immune cell compositions play a major role in response to immunotherapy but the heterogeneity and dynamics of immune infiltrates in human cancer lesions remain poorly characterized. Here we identify conserved intratumoral CD4 and CD8 T cell behaviors in scRNA-seq data from 25 melanoma patients. We discover a large population of CD8 T cells showing continuous progression from an early effector “transitional” into a dysfunctional T cell state. CD8 T cells that express a complete cytotoxic gene set are rare, and TCR sharing data suggest their independence from the transitional and dysfunctional cell states. Notably, we demonstrate that dysfunctional T cells are the major intratumoral proliferating immune cell compartment and that the intensity of the dysfunctional signature is associated with tumor-reactivity. Our data demonstrate that CD8 T cells previously defined as exhausted, are in fact a highly proliferating, clonal and dynamically differentiating cell population within the human tumor microenvironment.