Primary T cell activation requires B7-CD28 and CD40-CD154 costimulation, but effector T cell functions are considered to be largely independent of these costimulatory pathways. Although blockade of costimulation with cytolytic T lymphocyte-associated antigen 4-immunoglobulin (CTLA-4-Ig) or monoclonal antibody (mAb) to CD154 prolongs allograft survival, chronic rejection follows, which suggests that additional key costimulatory pathways are active in vivo. We found that both antibody to inducible costimulator (anti-ICOS) and an ICOS-Ig fusion protein suppressed intragraft T cell activation and cytokine expression and prolonged allograft survival in a manner similar to that in ICOS-/- allograft recipients. The combination of anti-ICOS therapy and cyclosporin A led to permanent engraftment. In addition, ICOS-B7RP-1 costimulation was required for the development of chronic rejection after CD40-CD154 blockade. These data demonstrate a key role for the ICOS-B7RP-1 pathway in acute and chronic rejection and highlight the benefits of targeting this pathway in combination with the use of conventional immunosuppressive agent.