Blocking CD28-B7 T-cell costimulation by CTLA4Ig induces tolerance to rat renal allografts and inhibits Th1, but spares Th2, cytokines. We now report on the mechanisms of CD28-B7 blockade in this model. Lymphocytes from CTLA4Ig-treated animals showed significant reduction of mixed lymphocyte response, as well as antidonor cytotoxic T-cell effector function, as compared with rejecting controls. Flow cytometry studies on sera of renal allograft recipients showed complete inhibition of antidonor humoral responses by CTLA4Ig. Analysis by reverse transcriptase-polymerase chain reaction and immunohistology showed that intragraft macrophage products, monocyte chemoattractant protein-1 and inducible nitric oxide synthase, were reduced by CTLA4Ig therapy. Immunohistologic studies also showed reduced intragraft macrophage infiltration and decreased staining for the fibrogenic and mitogenic growth factor, transforming growth factor-beta. These results indicate that CD28-B7 blockade inhibits cell-mediated and humoral immune responses, and suggest that strategies targeting T-cell costimulation may provide a novel approach to prevent chronic allograft rejection.