Several receptors and counter-receptor pairs on T cells and on antigen-presenting cells (APCs) deliver costimulatory signals to T cells during antigen presentation. The CD28 receptor on T cells with its ligand B7 represents one of the best characterized and most important examples of this costimulation. We show here that interleukin 12 (IL-12), a cytokine also produced by APCs (monocyte/macrophages and B cells) and active on T and natural killer cells, has a strong synergistic effect with the B7/CD28 interaction in inducing proliferation and cytokine production in both mitogen-activated and freshly isolated peripheral blood T cells. Together with anti-CD28 antibodies, IL-12 induces proliferation of T cells to levels higher than those obtained with IL-2 stimulation and it is effective at IL-12 concentrations 100- to 1,000-fold lower than effective concentrations of IL-2. The proliferative effect of anti-CD28 and IL-12 is resistant to moderate doses of cyclosporin A and is largely independent of endogenous IL-2, IL-12, in synergy with anti-CD28 or B7-transfected cells, is most effective in inducing interferon gamma (IFN-gamma) production, but production of tumor necrosis factor alpha and granulocyte/macrophage colony-stimulating factor is also observed. IL-12-induced IFN-gamma production in peripheral blood mononuclear cells is inhibited by the chimeric molecule CTLA-4 immunoglobulin, which prevents binding of CD28 to B7, suggesting that endogenous B7 on the mononuclear cells and IL-12 cooperate in inducing IFN-gamma production. IL-10 inhibits both IL-12 production and B7 expression on monocytes. These two effects are largely responsible for the ability of IL-10, acting on accessory cells, to inhibit IFN-gamma production by lymphocytes, because anti-CD28 antibodies and IL-12 can reverse the inhibitory effect of IL-10 on IFN-gamma production. Our results in vitro suggest that the synergy between B7 and IL-12, a surface antigen and a soluble product of APCs, respectively, plays a role in regulating T cell activation and immune response in the microenvironment of inflamed tissues.