The fluctuating nature of disease activity in systemic lupus erythematosus (SLE), alternating between flares and remissions, poses substantial challenges for its effective management. The use of current biomarkers for monitoring SLE is limited in clinical settings owing to insufficient comprehension of the complex immune involvement underlying the disease course. Here, therefore, we profiled peripheral blood mononuclear cells at both stable and exacerbation states (total of n = 19) from six patients with SLE and 32 healthy donors using integrated single-cell RNA and T cell receptor (TCR) sequencing. To validate our findings, we analyzed two independent external datasets: bulk RNA sequencing and TCR data from 79 controls and 62 patients with SLE and single-cell RNA sequencing data from 99 healthy controls and 162 patients with SLE. Our analysis revealed cell type-specific activation of interferon-related genes in SLE grouped into four clusters, with elevated activity in disease-associated immune cells. Among these, atypical B cells associated with autoantibody production exhibited distinct differentiation patterns compared with conventional memory B cells, driven by heightened interferon signaling in SLE. Notably, clonal expansion of effector CD8 T cells emerged as a key driver of disease exacerbation, as indicated by reduced TCR diversity. Specific CD8 T cell clonotypes expanded during flare states, transitioning to effector phenotypes that exhibited heightened cytotoxicity and amplified interferon signaling, strongly correlating with tissue damage and flare severity. Our findings establish a critical link between interferon-driven mechanisms and cytotoxic T cell dysfunction in SLE flares, offering potential targets for therapeutic intervention and predictive biomarkers.