Current models of CD4(+) T cell help suggest a major role for CD154 binding to CD40 expressed on dendritic cells, with a lesser role for direct T:T interactions via CD40 expressed on CD8(+) T cells. However, the contribution of CD8(+) T cell-derived CD40 signals during the donor-reactive T cell response to a transplant has never been studied. In this study, we examined the graft-rejection kinetics and CD4(+) and CD8(+) donor-reactive T cell responses under conditions in which CD40 was genetically ablated only on APC, as well as under conditions in which CD40 was genetically ablated only on donor-reactive CD8(+) T cells. Our results revealed a significant role for CD8(+) T cell-expressed CD40 in the augmentation of donor-reactive CD8(+) T cell responses following transplantation and showed that CD40 expressed on CD8(+) T cells must be inhibited to allow conversion of CD4(+) T cells into induced regulatory T cells. Thus, this study identifies a major role for CD8(+) T cell-derived CD40 signals as a critical switch factor that both promotes optimal differentiation of cytokine-producing CD8(+) effector T cell responses and inhibits the differentiation of Ag-specific Foxp3(+) induced regulatory T cells in vivo.