Chimeric antigen receptor (CAR) T cells mediate anti-tumour effects in a small subset of patients with cancer, but dysfunction due to T cell exhaustion is an important barrier to progress. To investigate the biology of exhaustion in human T cells expressing CAR receptors, we used a model system with a tonically signaling CAR, which induces hallmark features of exhaustion. Exhaustion was associated with a profound defect in the production of IL-2, along with increased chromatin accessibility of AP-1 transcription factor motifs and overexpression of the bZIP and IRF transcription factors that have been implicated in mediating dysfunction in exhausted T cells. Here we show that CAR T cells engineered to overexpress the canonical AP-1 factor c-Jun have enhanced expansion potential, increased functional capacity, diminished terminal differentiation and improved anti-tumour potency in five different mouse tumour models in vivo. We conclude that a functional deficiency in c-Jun mediates dysfunction in exhausted human T cells, and that engineering CAR T cells to overexpress c-Jun renders them resistant to exhaustion, thereby addressing a major barrier to progress for this emerging class of therapeutic agents.