CD3 bispecific antibodies (bsAbs) show great promise as anticancer therapeutics. Here, we show in-depth mechanistic studies of a CD3 bsAb in solid cancer, using DuoBody-CD3x5T4. Cross-linking T cells with tumor cells expressing the oncofetal antigen 5T4 was required to induce cytotoxicity. Naive and memory CD4+and CD8+T cells were equally effective at mediating cytotoxicity, and DuoBody-CD3x5T4 induced partial differentiation of naive T-cell subsets into memory-like cells. Tumor cell kill was associated with T-cell activation, proliferation, and production of cytokines, granzyme B, and perforin. Genetic knockout ofFASorIFNGR1in 5T4+tumor cells abrogated tumor cell kill. In the presence of 5T4+tumor cells, bystander kill of 5T4−but not of 5T4−IFNGR1−tumor cells was observed. In humanized xenograft models, DuoBody-CD3x5T4 antitumor activity was associated with intratumoral and peripheral blood T-cell activation. Lastly, in dissociated patient-derived tumor samples, DuoBody-CD3x5T4 activated tumor-infiltrating lymphocytes and induced tumor-cell cytotoxicity, even when most tumor-infiltrating lymphocytes expressed PD-1. These data provide an in-depth view on the mechanism of action of a CD3 bsAb in preclinical models of solid cancer.