The co-stimulatory role of B7/CD28 interactions is important in promoting T cell activation. Very little is known about the intracellular events that follow CD28 engagement although recent evidence has implicated coupling of CD28 to a protein tyrosine kinase signal transduction pathway. In this study we have investigated the putative role of D-3 phosphoinositides as mediators of CD28 receptor signaling, since phosphoinositide (PI) 3-kinase, the enzyme responsible for D-3 phosphoinositide formation, is a known substrate for protein tyrosine kinases associated with certain T cell surface receptors such as CD4 and interleukin-2 receptor. The lipid products of PI 3-kinase activity have been suggested to play a role in mitogenic signaling and growth regulation in other cells. Chinese hamster ovary cells (CHO) previously transfected with B7 cDNA, induced time-dependent elevation above basal levels of phosphatidylinositol(3,4)-bisphosphate (PtdIns(3,4)P2) and PtdIns(3,4,5)P3, while parental CHO cells that did not express B7 had no effect on these lipids. Moreover, the elevation of these same lipids by CD3 ligation was potentiated in an additive manner by CHO-B7+ but not by CHO-B7- cells. CHO-B7+ and CHO-B7- cells did not activate phospholipase C as evidenced by their inability to modulate basal or CD3-induced changes in the levels of phosphatidic acid or D-4 and D-5 phosphoinositides. These data imply that PI 3-kinase but not phospholipase C, may be an important signal transduction molecule with respect to CD28-mediated co-stimulation and T cell activation following ligation by B7.