The B7 family members B7-1 and B7-2 interact with CD28 and constitute an essential T-cell co-stimulatory pathway in the initiation of antigen-specific humoral and cell-mediated immune response. Here, we describe a third member of the B7 family, called B7-H1 that does not bind CD28, cytotoxic T-lymphocyte A4 or ICOS (inducible co-stimulator). Ligation of B7-H1 co-stimulated T-cell responses to polyclonal stimuli and allogeneic antigens, and preferentially stimulated the production of interleukin-10. Interleukin-2, although produced in small amounts, was required for the effect of B7-H1 co-stimulation. Our studies thus define a previously unknown co-stimulatory molecule that may be involved in the negative regulation of cell-mediated immune responses.