Two functionally different memory T cell subsets were originally defined based on their different CCR7 expression profile, but the lineage relationship between these subsets referred to as central memory T cells (T(CM)) and effector memory T cells (T(EM)), is not resolved. A prevalent model proposes a linear progressive differentiation from T(CM) to T(EM). Our results demonstrate that on activation, human CCR7-CD62L- peripheral blood CD8+ and CD4+ T(EM) cells exhibit a dynamic differentiation, involving transient as well as stable changes to T(CM) phenotype and properties. Whereas the larger fraction of T(EM) cells increases expression of effector molecules, such as perforin or IFN-gamma, a smaller fraction first acquires CCR7 expression. We demonstrate that this acquisition of lymph node homing potential is associated with strong proliferation similar to that of activated T(CM) cells. After proliferation, most of these cells lose CCR7 expression again and acquire effector functions (e.g., perforin production). A small proportion (approximately 6%), however, maintain phenotypic and functional T(CM) properties over a long time interval. These results suggest that T(EM) cells provide immediate effector function by a fraction of cells as well as self-renewal by others through up-regulation of CCR7 followed by either secondary peripheral effector function or long term maintenance of T(CM)-like properties.