The proximal segment of murine kidney tubule cells (KTC) constitutively expresses low levels of class II major histocompatibility complex (MHC) that are upregulated during local and systemic inflammation. It is not known if KTC also express the costimulator molecules necessary for them to productively participate in immune responses and stimulate T cells. To answer this question, we studied the ability of KTC to present antigens to four Th1 clones. KTC did not induce T cell proliferation to specific antigen, superantigen, or concanavalin A. However, T cell receptors did engage the peptide/MHC ligand presented by KTC, as indicated by T cell enlargement and upregulation of interleukin-2 receptor expression. Importantly, KTC failed to express the Th1 costimulator, B7, as detected by fluorescence cytometry and reverse transcription polymerase chain reaction. We directly demonstrated that lack of B7 expression accounted for at least part of the KTC presentation defect, in that a KTC line transfected with the cDNA for B7 stimulated T cell proliferation to antigen. Our results suggest that epithelial cells expressing class II MHC have developed mechanisms to prevent costimulator expression and limit parenchymal tissue destruction. Failure of class II-expressing epithelial cells to limit costimulator expression may be an important component of organ-specific autoimmunity.