Interferon gamma (IFNɣ) produced by CD4 T cells is required for immune containment of Mycobacterium tuberculosis (Mtb) infection. Despite this, IFNɣ plays a minor role in CD4 T cell- mediated immunity within the lung. In this study, we use a recently-developed murine model of physiologic Mtb infection coupled with advanced quantitative imaging to demonstrate that IFNɣ production by Mtb-specific T cells is rapidly extinguished within the granuloma, but not in unaffected areas of the lung. This is mediated via TGFβ signaling, which is observed preferentially within granulomas in mice and Rhesus macaques, and results in cell-intrinsic immunosuppression in effector T helper 1 cells within the granuloma. Blockade of TGFβ signaling in T cells results in improved function and decreased pulmonary bacterial burden. These findings uncover a potent spatially localized immunosuppressive mechanism associated with Mtb infection and provide potential targets for host-directed therapy.