Increased expression of the costimulatory molecule CD80 (B7-1) was noted in the subventricular zone of the brain during the course of experimental autoimmune encephalomyelitis (EAE). This area of the brain is a neural stem cell (NSC) niche in the adult. We show that isolated NSCs from adult brain express CD80 and CD86 (B7-2) and this expression is increased after exposure to IFN-gamma or TNF-alpha, the prototypical Th1 cytokines expressed during EAE. CD80 and CD86 expressed by NSCs are functional and can costimulate allogeneic cells in a mixed lymphocyte reaction. Furthermore, cross-linking of CD80 on the surface of NSCs results in apoptosis of NSCs. In vitro, we show that T cells can interact with NSCs and form conjugates with redistribution of CD3 on the surface of T cells to the area of contact. These data raise the possibility that during CNS inflammatory diseases such as EAE, NSCs may express immune molecules and interact with the inflammatory environment potentially resulting in injury to the NSCs, which may have implications for repair mechanisms in the central nervous system.