Chimeric antigen receptor (CAR) T cell therapy has shown remarkable efficacy in cancer treatment. Still, most patients receiving CAR T cells relapse within 5 years of treatment. CAR-mediated trogocytosis (CMT) is a potential tumor escape mechanism in which cell surface proteins transfer from tumor cells to CAR T cells. CMT results in the emergence of antigen-negative tumor cells, which can evade future CAR detection, and antigen-positive CAR T cells, which is hypothesized to lead to CAR T cell fratricide and dysfunction. Using a system to selectively degrade trogocytosed antigen in CAR T cells, we show that the presence of trogocytosed antigen in CAR T cells directly causes CAR T cell fratricide and exhaustion. By performing a small molecule screening using a custom high throughput CMT-screening assay, we identified the cysteine protease cathepsin B (CTSB) as a key driver of CMT. We show that overexpression of cystatin A (CSTA), an endogenous human inhibitor of CTSB, reduces trogocytosis resulting in prolonged antitumor activity and increased CAR T cell expansion/persistence. Overall, we show that targeting CMT is an effective approach to enhance CAR T cell function, which may improve their clinical efficacy.