CD40 is an important mediator of immune and inflammatory responses. It is a costimulatory molecule for B cell proliferation and survival. Blockade of CD40 has been shown to induce tolerance and its role in other pathogenic conditions has led to the proposal that CD40 inhibition could be valuable therapeutically. As a first step to this end, we have characterized a CD40-dominant negative receptor. This inhibitory mutant lacks the identified CD40 signaling domains. It inhibits both cotransfected and endogenous CD40 activation of NF-kappaB. This mutant is specific, as it does not affect TNF or latent membrane protein 1 signaling. Its potential usefulness is illustrated by its ability to inhibit the CD40 ligand-stimulated increases of HLA and CD54 expression, molecules involved in Ag recognition and lymphocyte recruitment leading to organ rejection. The inhibitory mutant has no TNFR-associated factor 2-binding capabilities and inhibits the recruitment of TNFR-associated factor 2 to the CD40 signaling complex after stimulation. These studies show that the CD40 inhibitory receptor molecule is effective, specific, and useful both for research and potentially as a clinical tool. And furthermore, it is likely that similar dominant inhibitory receptors can be generated for all of the members of the TNFR superfamily.