B and T lymphocyte attenuator (BTLA) is a negative regulator of T cell activation, but its function in vivo is not well characterized. Here we show that mice deficient in full-length BTLA or its ligand, herpesvirus entry mediator, had increased number of memory CD8⁺ T cells. The memory CD8⁺ T cell phenotype resulted from a T cell–intrinsic perturbation of the CD8⁺ T cell pool. Naive BTLA-deficient CD8⁺ T cells were more efficient than wild-type cells at generating memory in a competitive antigen-specific system. This effect was independent of the initial expansion of the responding antigen-specific T cell population. In addition, BTLA negatively regulated antigen-independent homeostatic expansion of CD4⁺ and CD8⁺ T cells. These results emphasize two central functions of BTLA in limiting T cell activity in vivo.