T cell-retargeting therapies have transformed the therapeutic landscape of oncology. Regardless of the modality, T cell activating therapies are commonly accompanied by systemic cytokine release, which can progress to deadly cytokine release syndrome (CRS). Because of incomplete mechanistic understanding of the relationship between T cell activation and systemic cytokine release, optimal toxicity management that retains full therapeutic potential remains unclear. Here, we report the cell type-specific cellular mechanisms that link CD3 bispecific antibody-mediated killing to toxic cytokine release. The immunologic cascade is initiated by T cell triggering, whereas monocytes and macrophages are the primary source of systemic toxic cytokine release. We demonstrate that T cell-generated tumor necrosis factor-α (TNF-α) is the primary mechanism mediating monocyte activation and systemic cytokine release after CD3 bispecific treatment. Prevention of TNF-α release is sufficient to impair systemic release of monocyte cytokines without affecting antitumor efficacy. Systemic cytokine release is only observed upon initial exposure to CD3 bispecific antibody not subsequent doses, indicating a biological distinction between doses. Despite impaired cytokine release after second exposure, T cell cytotoxicity remained unaffected, demonstrating that cytolytic activity of T cells can be achieved in the absence of cytokine release. The mechanistic uncoupling of toxic cytokines and T cell cytolytic activity in the context of CD3 bispecifics provides a biological rationale to clinically explore preventative treatment approaches to mitigate toxicity.