Both the recognition of MHC/antigen complex by the T-cell receptor and engagement of costimulatory molecules are necessary for efficient T-cell activation. CD28 has been widely recognized as the major costimulation pathway for naive T-cell activation, and the CD28/B7 pathway plays a central role in immune responses against pathogens, autoimmune diseases, and graft rejection. In this review, we will summarize evidence that CD28 is also prominent in the regulation of immune responses and the maintenance of peripheral tolerance. Indeed, CD28 engagement increases the expression of the down-modulatory molecule CTLA-4, induces the differentiation of Th2 cells that have a protective function in autoimmunity, and has an obligatory role in the homeostasis of regulatory T cells. Therefore, CD28/B7 interactions induce a balance of costimulatory and regulatory signals that have opposite outcomes on immune responses. This new perspective on CD28 function suggests that caution should be taken in the development of immunotherapies targeting costimulatory pathways.