Thymic shared antigen-1 (TSA-1) is a glycosyl-phosphatidylinositol (GPI)-anchored differentiation Ag expressed on murine lymphocytes, and is identical to stem cell Ag-2 (Sca-2). Using newly established mAb against TSA-1/Sca-2, we have previously shown that surface TSA-1 expression is induced upon activation in T cells, and that anti-TSA-1 inhibits IL-2 production induced by anti-CD3 stimulation in T cell hybridomas. In the present study, we have analyzed the functional role of TSA-1 during T cell activation using normal T cells, T cell hybridomas, and transfected Jurkat cell lines that expressed either GPI-anchored or transmembrane form of TSA-1. Anti-TSA-1 inhibited IL-2 production from normal T cells stimulated with soluble anti-CD3 plus accessory cells. Anti-TSA-1 exhibited the inhibitory effect on T cells, but not on accessory cells, because anti-TSA-1 inhibited IL-2 production in Jurkat cells transfected with TSA-1 cDNA, but not in control transfectant. A transmembrane form of TSA-1 was expressed in Jurkat cells by fusing the extracellular portion of TSA-1 to the transmembrane and cytoplasmic regions of the class 1 Db. The analysis using this transfectant revealed that anti-TSA-1-mediated inhibition of IL-2 production did not require the GPI anchor of TSA-1. Finally, in addition to the inhibition of IL-2 production, tyrosine phosphorylation of CD3 zeta-chains observed following TCR stimulation, one of the important early activation events, was markedly reduced by anti-TSA-1. These results imply that TSA-1/Sca-2 plays an important regulatory role in the TCR signaling pathway of activated T cells in addition to its role in T cell differentiation.