The participation of costimulatory molecule interactions in positive selection of T lymphocytes was addressed by assessing the ability of a positively selecting thymic epithelial cell (TEC) line, 427.1, to stimulate allospecific CTL responses. Stimulation of H-2s spleen cells with the H-2b expressing 427.1 line does not result in the generation of cells capable of lysing H-2b target cell lines. The level of expression of MHC class I molecules by 427.1 is lower than that found in other stimulatory TEC lines. However, this finding does not account for the nonstimulatory phenotype. Up-regulation of MHC class I did not result in stimulation, and fusion of 427.1 cells with stimulatory TEC resulted in a line with low MHC class I molecule expression and stimulatory phenotype. The TEC line 427.1 does not express the costimulatory molecule B7/BB1, and transfection of the B7/BB1-encoding DNA results in expression of the molecule and conversion into a stimulatory phenotype, demonstrating directly that the non-stimulatory phenotype is a result of lack of costimulation. However, B7/BB1 expression does not improve the ability of 427.1 TECs to induce positive selection. Intrathymic injection of the B7/BB1 transfected, compared with mock transfected 427.1 cells, rescued fewer CD8+ mature thymocytes in beta 2-microglobulin negative mice. Therefore, unlike the peripheral T cell responses to Ag, positive selection of T cells in the thymus may not depend on the costimulation provided by the presenting cell.