T cell exhaustion has been shown to be a key resistance mechanism to efficacy of T cell engagers (TCE) in multiple myeloma (MM). Mezigdomide, a potent cereblon E3 ligase modulator that targets IKZF1 and IKZF3 simultaneously for proteasomal degradation, has been shown to modulate T cell activity in MM patients. We explored the possibility that targeting IKZF1/IKZF3 could address T cell exhaustion and restore functionality. We conducted extensive transcriptomic and epigenetic profiling on ex vivo generated exhausted T cells, using their autologous activated T cells as a comparison. Our study reveals that IKZF1 and IKZF3 are critical regulators contributing to the development and maintenance of T cell exhaustion. They regulate transcription by directly binding to promoters and enhancers, both proximal and distal, thereby altering transcriptional potential. Increased IKZF1 binding to exhaustion genes after multiple T cell stimulations results in enhancement of transcription, while binding to cytokine genes results in transcription repression. Mezigdomide treatment in exhausted T cells results in decreased expression of exhaustion-related markers, increased proinflammatory cytokine expression, and enhanced target cell killing with Alnuctamab, a B-cell maturation antigen (BCMA) targeting TCE. This study provides crucial mechanistic insights into the roles of IKZF1/IKZF3 in T cell exhaustion, supporting the rationale for combining mezigdomide with TCEs to enhance therapeutic outcomes in MM.