Costimulatory molecules B7-1 and B7-2 (hereby collectively called B7) interact with CD28 and CTLA4 on T cells and promote antitumor immunity. The function of B7-CTLA4 interaction in antitumor CTL response remains controversial. Here we used CD28(-/-) and CD28(+/-) or CD28(+/+) transgenic mice that express the T-cell receptor specific for an unmutated tumor antigen, PIA, and for tumor cells expressing a CTLA4-specific B7 mutant to evaluate the function of CD28-B7 and CTLA4-B7 interactions in induction and effector phases of antitumor immunity. We report that B7-CD28 and B7-CTLA4 interactions promote tumor rejection. However, this is achieved by distinct mechanisms. B7-CD28 interaction enhances T-cell clonal expansion, though a role for this interaction in the effector phase cannot be ruled out. In contrast, B7-CTLA4 interaction enhances the CTL-mediated destruction of tumors, but not T-cell clonal expansion, (C) 2002 by The American Society of Hematology.