The proinflammatory cytokine IL-12 drives the generation of terminally differentiated KLRG1(+) effector CD8(+) T cells. Using a Toxoplasma vaccination model, we delineate the sequence of events that nave CD8(+) T cells undergo to become terminal effectors and the differentiation steps controlled by IL-12. We demonstrate that direct IL-12 signaling on CD8(+) T cells is essential for the induction of KLRG1 and IFN-, but the subsequent downregulation of CXCR3 is controlled by IL-12 indirectly through the actions of IFN- and IFN--inducible chemokines. Differentiation of nascent effectors occurs in an extrafollicular splenic compartment and is driven by late IL-12 production by DCs distinct from the classical CD8(+) DC. Unexpectedly, we also found extensive proliferation of both KLRG1(-) and KLRG1(+) CD8(+) T cells in the marginal zone and red pulp, which ceases prior to the final KLRG1(Hi) CXCR3(Lo) stage. Our findings highlight the notion of an extrafollicular pathway for effector T cell generation.