We have recently described in cord blood T cells (CBTC) a novel pathway linking CD38 and CD73, two signal transducers with ecto-enzyme activity. The aim of this study was 2-fold: first, to characterize the mechanisms by which CD38 regulates CD73 expression; and second, to determine whether surface-induced CD73 modulates CBTC responses. A marked increase in CD73 expression was observed in CD38+ cells after incubation with the appropriate CD38 mAbs. The induction of CD73 was blocked by wortmannin, a specific inhibitor of phosphatidylinositol 3-kinase (PI3-K). CD38 stimulation induced tyrosine phosphorylation of the p85 regulatory subunit of PI3-K and its association with other tyrosine-phosphorylated proteins. Surface-induced CD73 was as efficient in delivering activatory signals as the CD73 constitutively expressed on adult T cells. Highly CBTC, totally unresponsive to mitogenic concentrations of plastic-immobilized CD3 mAb, proliferated vigorously when exposed to the combination of plastic-immobilized CD3 and CD73 mAbs. The reactivity to allogeneic irradiated PBMC was also significantly enhanced by CD38 stimulation and was dependent on CD73 expression. Thus, CD38 stimulation lowers the activation threshold of CBTC by the CD3/TCR complex and enhances their reactivity to allogeneic cells via activation of the PI3-kinase pathway and CD73 expression.