The functional development of tumor-specific CD4+ T cells has a critical impact on the outcome of antitumor immune responses. Adoptive immunotherapy involving tumor-specific CD4+ T cells has shown encouraging clinical benefits in some cancer patients. To mount an effective antitumor immunity, it is desirable to elicit activated type 1 T helper cells. Here, we report that type 1 T helper cell-like effector cells that arose in tumor-bearing hosts progressively expressed programmed death 1 during tumor growth. The programmed death 1hi effector cells displayed a dysfunctional phenotype, characterized by selective down-regulation of interleukin-7 receptor, heightened apoptosis, and poor antitumor efficacy. This tumor-driven aberrant T-cell response could be prevented by a single dose of the widely used chemotherapy agent cyclophosphamide. We show that chemotherapy conditioned the host environment, creating a transient window for optimal effector differentiation for adoptively transferred CD4+ T cells. This robust effector differentiation, which was antigen-driven and mechanistically dependent on an intact host response to type I interferon, gave rise to activated polyfunctional T helper cells with high interleukin-7 receptor, rapid clonal expansion, and potent antitumor activity against established B-cell lymphomas. We hypothesize that prevention of tumor-induced effector cell dysfunction is a major mechanism contributing to the efficacy of combined chemoimmunotherapy.