Multiple pathogens utilize quiescent developmental stages associated with persistence. A lack of tractable models has made it difficult to assess how latency impacts infection outcome. Toxoplasma gondii forms long-lived tissue cysts in neurons, which is considered necessary for immune evasion and persistence. During infection, activated T cells can re-encounter cognate antigen, but how these events influence local effector responses or formation of memory populations is unclear. To address this issue, OT-I T cells which express the Nur77-GFP reporter of TCR activation were paired with the parasite Toxoplasma gondii that expresses OVA to assess how secondary encounter with antigen influences CD8+ T cell responses. During the chronic stage of infection in the CNS, TCR activation was associated with large scale transcriptional changes and the acquisition of an effector T cell phenotype as well as the generation of a population of CD103+ CD69+ Trm like cells. However, while inhibition of parasite replication resulted in reduced effector responses it did not alter the Trm population. Unexpectedly, modeling of infection dynamics best predicted experimental outcomes when the cyst was placed under immune pressure. Experimental data revealed cysts were recognized by CD8+ T cells and that IFN- signaling in neurons contributes to parasite control. Yet, the inability to switch from the replicative to the encysted stage resulted in enhanced virulence, decreased host survival, and cryptic parasite persistence. Thus, for T. gondii, latency in neurons does not abrogate detection but rather provides a replicative sink that contributes to host and microbial survival.