T cell activation results in dynamic remodeling of the chromatin at the IL2 promoter and induction of IL2 gene transcription. These processes are each dependent upon CD28 costimulation, but the molecular basis for this requirement is not clear. The IL2 promoter contains consensus-binding elements for Ikaros, a lymphocyte-specific zinc-finger DNA-binding protein that can regulate gene expression by recruiting chromatin-remodeling complexes. We find that native Ikaros in CD4(+) T cells exhibits sequence-specific binding to these elements in vitro, and interacts with the endogenous IL2 promoter in vivo, in a manner dependent upon its DNA-binding domain. This binding has important consequences on the regulation of the IL2 gene, because CD4(+) T cells with reduced Ikaros DNA-binding activity no longer require signals from the TCR or CD28 for histone acetylation at the endogenous IL2 promoter, and no longer require CD28 costimulation for expression of the IL2 gene. Furthermore, CD4(+) T cells with reduced Ikaros activity are resistant to clonal anergy induced by TCR ligation in the absence of either CD28 or IL-2R signals. These results establish Ikaros as a transcriptional repressor of the IL2 gene that functions through modulation of chromatin structure and has an obligate role in the induction of anergy.