Tissue-resident memory T cells provide local immune protection in barrier tissues, such as skin and mucosa. However, the molecular mechanisms controlling effector T cell retention and subsequent memory formation in those locations are not fully understood. In this study, we analyzed the role of CD69, an early leukocyte activation marker, in regulating effector T cell egress from peripheral tissues. We provide evidence that CD69 surface expression by skin-infiltrating CD8 T cells can be regulated at multiple levels, including local Ag stimulation and signaling through type I IFNRs, and it coincides with the transcriptional downregulation of the sphingosine-1-phosphate receptor S1P1. Importantly, we demonstrate that expression of CD69, by interfering with sphingosine-1-phosphate receptor function, is a critical determinant of prolonged T cell retention and local memory formation. Our results define an important step in the generation of long-lived adaptive immune memory at body surfaces.