Modification of murine K1735 melanoma cells to express the immune costimulator B7-1 had no effect on tumor formation in syngeneic mice. In contrast, <40% of mice inoculated with K1735 cells modified to secrete murine interleukin-2 (IL-2) formed tumors, and no tumors formed when the K1735 cells coexpressed both murine IL-2 and B7-1. However, administration of systemic recombinant human IL-2 had no detectable effect on the formation of tumors by the B7-1-expressing K1735 cells. By contrast, admixtures of IL-2-secreting and B7-1-expressing K1735 cells formed fewer tumors than either cell type alone. Murine IL-2 was effective only when secreted locally, because the IL-2-secreting cells inoculated into the right flank did not affect the growth of the B7-1-expressing cells inoculated into the opposite flank.