Unlike endogenous T cell receptors (TCRs), chimeric antigen receptors (CARs) have an intrinsic predisposition to initiate intracellular signaling in the absence of target antigen (Long AH, Nature Medicine 2015). This phenomenon, referred to as tonic signaling, has previously been shown to be a potent driver of T cell exhaustion when CARs contain the CD28 costimulatory domain (Lynn R, Nature 2019). We previously showed that, in contrast to CD28, CARs containing the 41BB costimulatory domain acquire enhanced functionality from tonic signaling (Singh N, Nature Medicine 2021). These data indicate that the impact of tonic CAR signaling is directly dependent on the CAR costimulatory domain. To understand the molecular regulators responsible for this divergent functionality, we generated CARs targeting CD22, an established immunotherapy target for B cell malignancies, that contained either CD28 or 41BB costimulatory domains and either did or did not signal tonically (22/28+, 22/BB+, 22/28-, 22/BB-). We confirmed that tonic signaling of CD28 drove impaired cytotoxic function, T cell expansion and cytokine secretion in response to antigen, while tonic 41BB improved all parameters of T cell function. Bulk RNA sequencing of CAR T cell products at the conclusion of manufacturing, when the impact of tonic CAR signaling was predicted to be most impactful, revealed significantly more transcriptional activity in both tonic CARs. Comparison of differentially expressed genes demonstrated that 22/28+ had high expression of targets of NFAT and AP1, transcription factors that promote T cell effector function but are also drivers of T cell exhaustion when persistently active (Martinez GJ, Immunity 2015; Lynn R, Nature 2019). 22/BB+ instead demonstrated high activity of BACH2, a transcriptional repressor that has recently been shown to preserve naïve and memory cell states by antagonizing effector programs (Yao C, Nature Immunology 2021; Roychoudhuri R, Nature Immunology 2016). We generated 22/28+ cells that overexpressed BACH2 (22/28+_BACH2) and found that this intervention completely rescued acute anti-tumor function, with cytotoxic activity of these cells equivalent to 22/BB+. Mass cytometry revealed that 22/28+_BACH2 cells were phenotypically very similar to 22/BB+ cells at the conclusion of manufacturing and after stimulation with target cells, expressing high levels of granzyme B, perforin, IFNγ and markers of memory differentiation. Intriguingly, 22/28+_BACH2 cells expressed very high levels of the transcription factor TCF7, known to play a role in maintaining memory, suggesting that transgenic BACH2 expression play a broad role in lineage regulation. To interrogate how BACH2 overexpression impacted long-term T cell function, we chronically stimulated these cells using our established in vitro protocol (Selli ME, STAR Protocols 2023) in which co-cultures of CAR T cells and tumors are continually replenished with additional tumor to maintain a persistent and high antigen burden. Similar to our previous studies, early function of 22/28+_BACH2 cells was significantly improved over 22/28+ but BACH2 overexpressing cells lost the ability to proliferate and kill tumor cells much earlier than either 22/28+ or 22/BB+. Phenotypic analysis revealed at time of cell failure revealed that almost all 22/28+_BACH2 cells expressed markers of a central memory phenotype (CD62L hiCD45RO hi). Collectively, these data suggest that BACH2 overexpression can overcome tonic CAR signaling-induced dysfunction by antagonizing exhaustion programs but simultaneously “locks” these cells into a memory state with restrained effector function, thus limiting their long-term efficacy.