Protein kinase C-θ (PKC-θ) translocates to the center of the immunological synapse, but the underlying mechanism and its importance in T cell activation are unknown. Here we found that the V3 domain of PKC-θ was necessary and sufficient for localization to the immunological synapse mediated by association with the coreceptor CD28 and dependent on the kinase Lck. We identified a conserved proline-rich motif in V3 required for association with CD28 and immunological synapse localization. We found association with CD28 to be essential for PKC-θ-mediated downstream signaling and the differentiation of T helper type 2 cells (T(H)2 cells) and interleukin 17-producing helper T cells (T(H)17 cells) but not of T helper type 1 cells (T(H)1 cells). Ectopic expression of V3 sequestered PKC-θ from the immunological synapse and interfered with its functions. Our results identify a unique mode of CD28 signaling, establish a molecular basis for the immunological synapse localization of PKC-θ and indicate V3-based 'decoys' may be therapeutic modalities for T cell-mediated inflammatory diseases.