The transcription factor inhibitor of DNA binding (Id)2 modulates T cell fate decisions, but the molecular mechanism underpinning this regulation is unclear. In this study we show that loss of Id2 cripples effector differentiation and instead programs CD8+ T cells to adopt a memory fate with increased Eomesodermin and Tcf7 expression. We demonstrate that Id2 restrains CD8+ T cell memory differentiation by inhibiting E2A-mediated direct activation of Tcf7 and that Id2 expression level mirrors T cell memory recall capacity. As a result of the defective effector differentiation, Id2-deficient CD8+ T cells fail to induce sufficient Tbx21 expression to generate short-lived effector CD8+ T cells. Our findings reveal that the Id2/E2A axis orchestrates T cell differentiation through the induction or repression of downstream transcription factors essential for effector and memory T cell differentiation.