IL-21, the most recently described member of the common gamma-chain cytokine family, is produced by activated CD4 T cells, whereas CD8 T cells express the IL-21 receptor. To investigate a possible role for IL-21 in the priming of naive CD8 T cells, we examined responses of highly purified naive OT-I CD8 T cells to artificial APCs displaying Ag and B7-1 on their surface. We found that IL-21 enhanced OT-I clonal expansion and supported development of cytotoxic effector function. High levels of IL-2 did not support development of effector functions, but IL-2 was required for optimal responses in the presence of IL-21. IL-12 and IFN-alpha have previously been shown to support naive CD8 T cell differentiation and acquisition of effector functions through a STAT4-dependent mechanism. Here, we show that IL-21 does not require STAT4 to stimulate development of cytolytic activity. Furthermore, IL-21 fails to induce IFN-gamma or IL-4 production and can partially block IL-12 induction of IFN-gamma production. CD8 T cells that differentiate in response to IL-21 have a distinct surface marker expression pattern and are characterized as CD44(high), PD-1(low), CD25(low), CD134(low), and CD137(low). Thus, IL-21 can provide a signal required by naive CD8 T cells to differentiate in response to Ag and costimulation, and the resulting effector cells represent a unique effector phenotype with highly effective cytolytic activity, but deficient capacity to secrete IFN-gamma.