Ag-pulsed B cells are potent APCs, in part, because of the ability of the Ig receptor to mediate rapid and specific Ag uptake. However, it is also known that full T cell activation requires signals delivered by costimulatory molecules, which naive B cells seem to lack. This study examines the effect Ig receptor engagement has on the expression and function of a new CD28 counter-receptor, B7-2. Unlike B7-1 (B7), B7-2 was rapidly induced on the cell surface of B cells after engagement of the Ig receptor by either anti-Ig mAbs or hen egg lysozyme (HEL) on normal and HEL-specific B cell receptor transgenic B cells, respectively. Furthermore, B7-2 expression was up-regulated on tolerant B cells isolated from HEL/anti-HEL double transgenic mice after Ag stimulation, although at lower levels than on nontolerant transgenic B cells. No significant cell surface levels of B7-1(B7) were observed under these conditions. Finally, the B7-2 molecules induced by Ig cross-linking costimulated T cell proliferation in a CD28-dependent manner, independent of B7-1(B7) expression. Thus, the effectiveness of Ag-specific B cells as APCs depends on both their enhanced Ag uptake, mediated by the B cell receptor, and immediate up-regulation of a potent costimulatory molecule, B7-2.