Allograft rejection involves T-cell activation, requiring T-cell receptor interactions with major histocompatibility complex (MHC) molecules and costimulatory signals delivered through the B7-CD28 pathway. We evaluated the effect of blocking this pathway on graft rejection and survival, in a rat experimental model of small bowel transplantation. Heterotopic small bowel transplantation was performed between PVG donor rats and DA recipient rats. The recipient animals were treated with CTLA4-Ig or irrelevant immunoglobulin (Ig)G as control and followed for 18, 30 or 90 days. The survival rate and degree of inflammation and accumulation of CD4+ T cells and macrophages were determined in the transplanted bowels. We found that administration of CTLA4-Ig significantly improved the survival rate compared to control rats: after 30 days 73% of the treated rats had survived and at 90 days 5/8 rats were still living, whereas in the control group only 2/8 rats had survived. The grafts showed preserved mucosal structure with only a mild degree of subacute inflammation and the accumulation of CD4+ T cells and macrophages was noticeably reduced in treated animals as compared to control rats. Necrosis was extensive in control rats, whereas CTLA4-Ig treated animals had grafts with at least some preserved villus morphology and no necrotic tissue. Although small bowel transplantation has proven exceptionally difficult, in this study we have shown that CTLA4-Ig treatment may provide a promising strategy to prevent rejection and induce long term tolerance and graft survival.