The membrane antigen B7/BB1 (refs 1, 2) is expressed on activated B cells, macrophages and dendritic cells, and binds to a counter-receptor, CD28, expressed on T lymphocytes and thymocytes. Interaction between CD28 and B7 results in potent costimulation of T-cell activation initiated through the CD3/T-cell receptor complex. Discrepancies between results with anti-CD28 and anti-B7 antibodies have suggested the existence of a second ligand for CD28 and CTLA-4 (refs 3, 6-8). We have generated a monoclonal antibody, IT2, that reacts with a 70K glycoprotein (B70). B70 complementary DNA was cloned from a B-lymphoblastoid cell line library and encodes a new protein of the immunoglobulin superfamily with limited homology to B7. B70 is expressed on resting monocytes and dendritic cells and on activated, but not resting, T, NK and B lymphocytes. IT2 substantially inhibited the binding of a CTLA4-immunoglobulin fusion protein to human B-lymphoblastoid cell lines and, together with anti-B7 antibody, completely blocked CTLA-4 binding. Further IT2 efficiently inhibited primary allogeneic mixed lymphocyte responses. These findings indicate that B70 is a second ligand for CD28 and CTLA-4 and may play an important role for costimulation of T cells in a primary immune response.