The accumulation of depolarized mitochondria in tumor-infiltrating T lymphocytes (TILs) has been shown to orchestrate transcriptomic and epigenetic reprogramming for exhaustion. However, the underlying mechanisms by which the accumulation of dysfunctional mitochondria orchestrate T cell exhaustion remain unclear. Here, we found that terminally exhausted T cells elevated gene signature involved in proteasome degradation. We further unveiled that T cells accumulating depolarized mitochondria displayed an elevated mitochondrial protein degradation, which result in increased abundance of regulatory heme (RH) due to degradation of hemoproteins. Interestingly, RH concentration is positive correlated with the exhaustion severity and the decline of stemness in CD8+ T cells within the tumor microenvironment. Exposure of exogenous heme during the in vitro repetitive stimulation facilitated commitment of T cell exhaustion and induced alterations in transcriptomic networks linking to T cell exhaustion. Additionally, abolishing PGRMC2, which is responsible for heme import into the nucleus, ameliorated CD8+ T cell exhaustion and enhanced mitochondrial fitness of tumor-infiltrating CD8+ T cells. Taken together, our work unveils the unexplored mechanism, mitochondrial protein degradation and heme-mediated transcriptional network, on orchestrating T cell exhaustion in response to the accumulation of depolarized mitochondria in CD8+ T cells. We further highlight that manipulating heme signaling axis can tailor T cell-based cellular therapies.