Over the past decade, immunotherapy has emerged as one of the most promising approaches to cancer treatment. The use of immune checkpoint inhibitors has resulted in impressive and durable clinical responses in the treatment of various cancers. Additionally, immunotherapy utilizing chimeric antigen receptor (CAR)-engineered T cells has produced robust responses in blood cancers, and T cell receptor (TCR)-engineered T cells are showing promising results in the treatment of solid cancers. Despite these noteworthy advancements in cancer immunotherapy, numerous challenges remain. Some patient populations are unresponsive to immune checkpoint inhibitor therapy, and CAR T cell therapy has yet to show efficacy against solid cancers. In this review, we first discuss the significant role that T cells play in the body’s defense against cancer. We then delve into the mechanisms behind the current challenges facing immunotherapy, starting with T cell exhaustion due to immune checkpoint upregulation and changes in the transcriptional and epigenetic landscapes of dysfunctional T cells. We then discuss cancer-cell-intrinsic characteristics, including molecular alterations in cancer cells and the immunosuppressive nature of the tumor microenvironment (TME), which collectively facilitate tumor cell proliferation, survival, metastasis, and immune evasion. Finally, we examine recent advancements in cancer immunotherapy, with a specific emphasis on T-cell-based treatments.