Transforming growth factor-β (TGF-β) is produced by tumors, and increased amounts of this cytokine in the tumor microenvironment and serum are associated with poor patient survival. TGF-β-mediated suppression of antitumor T cell responses contributes to tumor growth and survival. However, TGF-β also has tumor-suppressive activity; thus, dissecting cell type-specific molecular effects may inform therapeutic strategies targeting this cytokine. Here, using human peripheral and tumor-associated lymphocytes, we investigated how tumor-derived TGF-β suppresses a key antitumor function of CD4+ T cells, interferon-γ (IFN-γ) production. Suppression required the expression and phosphorylation of Smad proteins in the TGF-β signaling pathway, but not their nuclear translocation, and depended on oxygen availability, suggesting a metabolic basis for these effects. Smad proteins were detected in the mitochondria of CD4+ T cells, where they were phosphorylated upon treatment with TGF-β. Phosphorylated Smad proteins were also detected in the mitochondria of isolated tumor-associated lymphocytes. TGF-β substantially impaired the ATP-coupled respiration of CD4+ T cells and specifically inhibited mitochondrial complex V (ATP synthase) activity. Last, inhibition of ATP synthase alone was sufficient to impair IFN-γ production by CD4+ T cells. These results, which have implications for human antitumor immunity, suggest that TGF-β targets T cell metabolism directly, thus diminishing T cell function through metabolic paralysis.