Nedd4 and Itch are E3 ubiquitin ligases that ubiquitinate similar targets in vitro and thus are thought to function similarly. T cells lacking Itch show spontaneous activation and T helper type 2 polarization. To test whether loss of Nedd4 affects T cells in the same way, we generated Nedd4(+/+) and Nedd4(-/-) fetal liver chimeras. Nedd4(-/-) T cells developed normally but proliferated less, produced less interleukin 2 and provided inadequate help to B cells. Nedd4(-/-) T cells contained more of the E3 ubiquitin ligase Cbl-b, and Nedd4 was required for polyubiquitination of Cbl-b induced by CD28 costimulation. Our data demonstrate that Nedd4 promotes the conversion of naive T cells into activated T cells. We propose that Nedd4 and Itch ubiquitinate distinct target proteins in vivo.