The generation of an effective immune response involves antigen-specific T cell expansion and differentiation of effector function. T cell activation requires at least two distinct signals, including signaling via the antigen-specific T cell receptor (TCR) and a costimulatory pathway. Antigen stimulation of T cells can lead either to a productive immune response, characterized by proliferation, differentiation, clonal expansion and effector function, or, in the absence of an appropriate costimulation, to a state of long-lasting unresponsiveness, termed anergy. Anergic T cells fail to proliferate and secrete cytokines in response to secondary stimulation. The interaction between the costimulatory molecule CD28 on T cells and members of the B7 family on antigen-presenting cell results in upregulation of T cell proliferation and cytokine production and induces the expression of the anti-apoptotic protein Bcl-xl. Based of these findings, the two-signal requirement model for T cell activation is generally accepted today. The negative regulatory mechanisms during T cell activation are not well understood, but they are crucial for the maintainance of lymphocyte homeostasis. For several years the functional role of the enigmatic CD28 homologue cytotoxic T lymphocyte antigen-4 (CTLA-4) in T cell activation has been both obscure and controversial. CTLA-4 was initially supposed to provide a costimulatory signal in conjunction with TCR/CD3 signaling. Today we know that CD28 and CTLA-4 molecules may have diametrically opposed functions: signaling via CD28, in conjunctive with TCR, is required for T cell activation, while signaling via CTLA-4 is a negative signal that inhibits T cell proliferation. How the T cell integrates signals through the TCR/CD3 complex, CD28 and CTLA-4 to initiate, maintain and terminate antigen-specific immune response is in fact not fully clarified. In this review, we will focus on the emerging role of CTLA-4 as a negative regulator of T lymphocyte activation and its role in the dynamic interplay of activatory and inhibitory signals.