T cell exhaustion is a major impediment to antitumor immunity. However, it remains elusive how other immune cells in the tumor microenvironment (TME) contribute to this dysfunctional state. Here, we show that the biology of tumor-associated macrophages (TAMs) and exhausted T cells (T_ex) in the TME is extensively linked. We demonstrate that in vivo depletion of TAMs reduces exhaustion programs in tumor-infiltrating CD8⁺ T cells and reinvigorates their effector potential. Reciprocally, transcriptional and epigenetic profiling reveals that T_ex express factors that actively recruit monocytes to the TME and shape their differentiation. Using lattice light sheet microscopy, we show that TAM and CD8⁺ T cells engage in unique, long-lasting, antigen-specific synaptic interactions that fail to activate T cells but prime them for exhaustion, which is then accelerated in hypoxic conditions. Spatially resolved sequencing supports a spatiotemporal self-enforcing positive feedback circuit that is aligned to protect rather than destroy a tumor.