CD26 is a widely distributed 110 kD cell-surface glycoprotein with known dipeptidyl-peptidase IV (DPP-IV) activity in its extracellular domain. This ecto-enzyme is capable of cleaving amino terminal dipeptides from polypeptides with either L-proline or L-alanine in the penultimate position. On human T cells, CD26 expression appears late in thymic differentiation and is preferentially restricted to the CD4+ helper/memory population, and CD26 can deliver a potent co-stimulatory T-cell activation signal. The cDNA sequence of CD26 predicts a type II membrane protein with only 6 amino acids in its cytoplasmic region, suggesting that, in addition to DPP-IV enzyme activity, other signal-inducing molecules may be associated with CD26. Considerable evidence exists that CD26 interacts, presumably in its extracellular domain, with both CD45, a protein tyrosine phosphatase, and adenosine deaminase (ADA), each of which is capable of functioning in a signal transduction pathway. In addition, CD26 is the receptor for ADA, and ADA on the cell surface is involved in an important immunoregulatory mechanism by which released ADA binds to the cell-surface ADA. This multifunctional molecule may be involved in cell migration and the HIV-1-associated loss of CD4+ cells through the process of programmed cell death. Thus, CD26 appears to play a key role in a number of aspects of lymphocyte function.