Blocking of costimulatory signals for T cell activation leads to tolerance in several transplantation models, but the underlying mechanisms are incompletely understood. We analyzed the involvement of regulatory T cells (Treg) and deletion of alloreactive cells in the induction and maintenance of tolerance after costimulation blockade in a mouse model of graft-vs-host reaction. Injection of splenocytes from the C57BL/6 parent strain into a sublethally irradiated F(1) offspring (C57BL/6 x C3H) induced a GVHR characterized by severe pancytopenia. Treatment with anti-CD40L mAb and CTLA4-Ig every 3 days during 3 wk after splenocyte injection prevented disease development and induced a long-lasting state of stable mixed chimerism (>120 days). In parallel, host-specific tolerance was achieved as demonstrated by lack of host-directed alloreactivity of donor-type T cells in vitro and in vivo. Chimerism and tolerance were also obtained after CD25(+) cell-depleted splenocyte transfer, showing that CD25(+) natural Treg are not essential for tolerance induction. We further show that costimulation blockade results in enhanced Treg cell activity at early time points (days 6-30) after splenocyte transfer. This was demonstrated by the presence of a high percentage of Foxp3(+) cells among donor CD4(+) cells in the spleen of treated animals, and our finding that isolated donor-type T cells at an early time point (day 30) after splenocyte transfer displayed suppressive capacity in vitro. At later time points (>30 days after splenocyte transfer), clonal deletion of host-reactive T cells was found to be a major mechanism responsible for tolerance.