The activation and eventual clonal expansion of individual antigen-specific CD4+ T cell clones are dependent on the production of autocrine growth factors such as interleukin-2 (IL-2). The specificity of CD4+ T cell activation is imparted by T cell antigen receptor (TCR) recognition of peptide antigens bound to class II major histocompatibility complex (MHC)-encoded molecules on the surface of antigen-presenting cells (APCs), for example B cells, macrophages, and dendritic cells. To induce maximal IL-2 production by T cells, however, APCs must also provide non-antigen-specific costimulatory signals. Recent work indicates that APC-derived costimulatory signals play a critical role in determining whether lymphokine production, apoptotic cell death, or functional anergy is induced by TCR engagement. This information has allowed immunologists to manipulate costimulatory molecules to prevent allograft rejection and enhance tumor immunity. Here we review current information on the biologic effects of, and signal transduction pathways engaged by, several known receptor-ligand pairs that transduce costimulatory signals in T cells. Special emphasis will be placed on the interaction of CD28 on the T cell with its ligands, B7-1, B7-2, and B7-3 on the APC.