The costimulatory B7-1 (CD80)/B7-2 (CD86) molecules, along with T-cell receptor stimulation, together facilitate T-cell activation. This explains why in vivo B7 costimulation neutralization efficiently silences a variety of human autoimmune disorders. Paradoxically, however, B7 blockade also potently moderates accumulation of immune-suppressive regulatory T cells (Tregs) essential for protection against multiorgan systemic autoimmunity. Here we show that B7 deprivation in mice overrides the necessity for Tregs in averting systemic autoimmunity and inflammation in extraintestinal tissues, whereas peripherally induced Tregs retained in the absence of B7 selectively mitigate intestinal inflammation caused by Th17 effector CD4(+) T cells. The need for additional immune suppression in the intestine reflects commensal microbe-driven T-cell activation through the accessory costimulation molecules ICOSL and OX40L. Eradication of commensal enteric bacteria mitigates intestinal inflammation and IL-17 production triggered by Treg depletion in B7-deficient mice, whereas re-establishing intestinal colonization with Candida albicans primes expansion of Th17 cells with commensal specificity. Thus, neutralizing B7 costimulation uncovers an essential role for Tregs in selectively averting intestinal inflammation by Th17 CD4(+) T cells with commensal microbe specificity.