Dendritic cells (DCs), unique antigen-presenting cells (APCs) with potent T cell stimulatory capacity, direct the activation and differentiation of T cells by providing costimulatory signals. As such, they are critical regulators of both natural and vaccine-induced immune responses. A new B7 family member, B7-DC, whose expression is highly restricted to DCs, was identified among a library of genes differentially expressed between DCs and activated macrophages. B7-DC fails to bind the B7.1/2 receptors CD28 and cytotoxic T lymphocyte-associated antigen (CTLA)-4, but does bind PD-1, a receptor for B7-H1/PD-L1. B7-DC costimulates T cell proliferation more efficiently than B7.1 and induces a distinct pattern of lymphokine secretion. In particular, B7-DC strongly costimulates interferon gamma but not interleukin (IL)-4 or IL-10 production from isolated naive T cells. These properties of B7-DC may account for some of the unique activity of DCs, such as their ability to initiate potent T helper cell type 1 responses.