Costimulatory molecules play critical roles in the induction and effector function of T cells. More recent studies reveal that costimulatory molecules enhance clonal deletion of autoreactive T cells as well as generation and homeostasis of the CD25(+)CD4(+) regulatory T cells. However, it is unclear whether the costimulatory molecules play any role in the proliferation and differentiation of T cells before they acquire MHC-restricted TCR. In this study, we report that targeted mutations of B7-1 and B7-2 substantially reduce the proliferation and survival of CD4(-)CD8(-) (double-negative (DN)) T cells in the thymus. Perhaps as a result of reduced proliferation, the accumulation of RAG-2 protein in the DN thymocytes is increased in B7-deficient mice, which may explain the increased expression of TCR gene and accelerated transition of CD25(+)CD44(-) (DN3) to CD25(-)CD44(-) (DN4) stage. Qualitatively similar, but quantitatively less striking effects were observed in mice with a targeted mutation of CD28, but not CTLA4. Taken together, our results demonstrate that the development of DN in the thymus is subject to modulation by the B7-CD28 costimulatory pathway.