Immunotherapy has emerged as a promising therapeutic approach for cancer treatment by harnessing the immune system to target cancer cells. However, the efficacy of immunotherapy is hindered by the tumor microenvironment (TME), comprising regulatory T cells (Tregs), macrophages, myeloid-derived suppressor cells (MDSCs), neutrophils, soluble factors (TGF-β, IL-35, IL-10), and hypoxia. These components interact with inhibitory receptors (IRs) on T cells, leading to alterations in T cell transcriptomes, epigenomes, and metabolism, ultimately resulting in T cell exhaustion and compromising the effectiveness of immunotherapy. T cell exhaustion occurs in two phases: pre-exhaustion and exhaustion. Pre-exhausted T cells exhibit reversibility and distinct molecular properties compared to terminally exhausted T cells. Understanding these differences is crucial for designing effective interventions. This comprehensive review summarizes the characteristics of pre-exhausted and exhausted T cells and elucidates the influence of TME components on T cell activity, transcriptomes, epigenomes, and metabolism, ultimately driving T cell exhaustion in cancer. Additionally, potential intervention strategies for reversing exhaustion are discussed. By gaining insights into the mechanisms underlying T cell exhaustion and the impact of the TME, this review aims to inform the development of innovative approaches for combating T cell exhaustion and enhancing the efficacy of immunotherapy in cancer treatment.