In addition to presentation of antigen, T cells require additional or 'costimulatory' signals from antigen-presenting cells. Failure to receive costimulation following antigen presentation renders T cells anergic, and these cells are functionally incapable of proliferating or secreting cytokines in response to subsequent rechallenge. Recent evidence has demonstrated that a critical costimulatory signal is delivered by members of the B7 family. B7-1 (CD80) and B7-2 (CD86) provide costimulation through CD28, their ligand on the T cell. Dysregulation of expression of B7 may be implicated in the pathogenesis of autoimmune disease. In contrast, lack of expression of B7 on tumor cells may explain in part the lack of immune response against the majority of tumors. It may now be possible to exploit this pathway to induce immunological response against tumors. Blockade of this pathway will likely have significant impact on transplantation biology, to induce T-cell anergy and prevent graft rejection and graft-versus-host disease.