T cell response to its antigen requires recognition by the T cell receptor together with a co-receptor molecule, either CD4 or CD8. Additional molecules have been identified that are capable of delivering the co-stimulatory signals provided by APC. Following T cell priming, a number of T cell activation antigens are expressed that may play a role in the inactivation phase of the T cell response. The lymphocyte activation gene (LAG)-3 protein and its counter-receptors, the major histocompatibility complex (MHC) class II molecules, are such activation antigens whose interaction may result in the down-regulation of the ongoing immune response. To investigate the role of LAG-3/class II molecule interaction, we produced a soluble form of LAG-3 by fusing the extracellular Ig domains of this membrane protein to the constant region of human IgG1 (LAG-3Ig). Here, we show a direct and specific binding of LAG-3Ig to class II molecules on the cell surface. In addition, we show that LAG-3/class II molecule interaction leads to the down-regulation of CD4+ Ag-specific T cell clone proliferation and cytokine secretion. This inhibitory effect is observed at the level of the effector cells and not the APC and is also found with anti-CD3 mAb, PHA + PMA or low-dose IL-2 driven stimulation in the absence of APC. These functional studies indicate that T cell MHC class II molecules down-regulate T cell proliferation following LAG-3 binding and suggest a role for LAG-3 in the control of the CD4+ T cell response.