B7-H1 is a recently identified member of the B7 family molecules. Upon ligation to its receptors on T cells it regulates activation and differentiation of T cells. B7-H1 preferentially costimulates IL-10 production in resting T cells and further induces the apoptosis of activated T cells. PD-1 is a receptor of B7-H1 and is shown to mediate the inhibition of activated T cell response, presumably by inhibiting cell cycle progression. The expression of B7-H1 protein is limited to macrophage lineage of cells in normal tissues, although its mRNA transcription is found in a broad range of tissues. In contrast, B7-H1 is abundant in various human cancers. The tumor-associated B7-H1 increases apoptosis of antigen specific T cells, leading to growth of immunogenic tumor growth in vivo. Current data suggest that B7-H1 regulates the organ-specific tolerance in normal tissue and may contribute to immune evasion by cancers. Selective manipulation of B7-H1 pathway thus aids in the design of new regimens in the treatment of human autoimmune disease and the control of malignant cancers.