Expression of B7-family costimulatory molecules CD80 (B7-1) and CD86 (B7-2) on tumor cells enhances host immunity. However, the role of the two B7 receptors, CD28 and CTLA4 (CD152), on T cells in antitumor immune response has not been clearly elucidated. Based on the effects of anti-CD28 and anti-CTLA4 mAbs on T cell response, it was proposed that CD28-B7 interaction promotes antitumor immunity, whereas B7-CTLA4 interaction down-regulates it. A critical test for the hypothesis is whether selective engagement of CTLA4 receptors by their natural ligands CD80 and CD86 enhances or reduces antitumor immunity. Here we used tumors expressing wild-type and mutant CD80, as well as mice with targeted mutation of CD28, to address this issue. We report that in syngeneic wild-type mice, B7W (W88>A), a CD80 mutant that has lost binding to CD28 but retained binding to CTLA4, can enhance the induction of antitumor cytotoxic T lymphocytes (CTL); B7Y (Y201>A), which binds neither CD28 nor CTLA4, fails to do so. Consistent with these observations, B7W-transfected J558 plasmocytoma and EL4 thymoma grow significantly more slowly than those transfected with either vector alone or with B7Y. Optimal tumor rejection requires wild-type CD80. Moreover, expression of a high level of CD80 on thymoma EL4 cells conveys immunity in mice with a targeted mutation of CD28 gene. Taken together, our results demonstrate that B7-CTLA4 interaction enhances production of antitumor CTL and resistance to tumor challenge and that optimal enhancement of antitumor immunity by CD80 requires its engagement of both CD28 and CTLA4.