Hepatitis B virus (HBV)-specific CD8+ T cells fail to acquire effector functions after priming in the liver, but the molecular basis for the dysfunctionality is poorly understood. By comparing the gene expression profile of intrahepatically primed, dysfunctional HBV-specific CD8+ T cells with that of systemically primed, functional effector counterparts, we found that the expression of interferon-stimulated genes (ISGs) is selectively suppressed in the dysfunctional CD8+ T cells. The ISG suppression was associated with impaired phosphorylation of STAT1 in response to IFNα treatment. Importantly, a strong induction of type interferons (IFN-Is) in the liver facilitated the functional differentiation of intrahepatically primed HBV-specific CD8+ T cells in association with the restoration of ISGs expression in the T cells. These results suggest that intrahepatic priming suppresses IFN-I signaling in CD8+ T cells, which may contribute to the dysfunctionality. The data also suggest a therapeutic value of the robust induction of intrahepatic IFN-Is for the treatment of chronic HBV infection.