Over the last decades, cellular immunotherapy has revealed its curative potential. However, the inherent physiological characteristics of immune cells can limit the potency of this approach. Best defined in T cells, dysfunction associated with terminal differentiation, exhaustion, senescence, and activation-induced cell death undermine adoptive cell therapies. In this review, we concentrate on how the multiple mechanisms that articulate the various forms of immune dysfunction impact cellular therapies primarily involving conventional T cells, but also other lymphoid subtypes, in addition to the various strategies put in place to circumvent these effects. The repercussions of immune cell dysfunction across the full life cycle of cell therapy, from the source material, during manufacturing, and after adoptive transfer are discussed. Applicable to cellular products prepared from native and unmodified immune cells, as well as genetically engineered therapeutics, the understanding and potential modulation of dysfunctional features is key to the development of improved cellular immunotherapies.