Inducible costimulator (ICOS) ligand (ICOSL), a B7-related transmembrane glycoprotein with extracellular IgV and IgC domains, binds to ICOS on activated T cells and delivers a positive costimulatory signal for optimal T cell function. Toward determining the structural features of ICOSL crucial for its costimulatory function, the present study shows that ICOSL displays a marked oligomerization potential, resembling more like B7-1 than B7-2. Use of ICOSL constructs lacking either the IgC or IgV domain demonstrates that receptor binding is mediated solely by the IgV domain but requires the IgC domain for maintaining the structural integrity of the protein. To map further the receptor recognition surface on ICOSL, a homology-based protein structure model of the ICOS:ICOSL complex was constructed. Based on predictions from the model, a series of mutations were generated targeting the potential receptor binding surface on ICOSL, and the mutants were tested for their biological function in terms of ICOS binding and T cell costimulation ability. The results provide experimental validation of the model and show that the receptor binding site on ICOSL is constituted chiefly by aromatic/hydrophobic residues. Critical ICOSL residues essential for ICOS binding map to the GFCC'C'' beta-sheet face of the IgV domain and approximately overlap with the B7-1/B7-2 motif(s) that recognize CD28/CTLA-4. Altogether, similar structural features of ICOSL and B7 isoforms suggest a close evolutionary relationship between these costimulatory ligands, yet differences at the same time explain their unique specificity for the cognate binding partners, ICOS and CD28/CTLA-4, respectively.