Cross-linking of the GPI-anchored protein Thy-1 results in T cell proliferation and IL-2 synthesis. However, the exact function of Thy-1 in the process of T cell activation remains unknown, as does the effect of costimulation on Thy-1-driven T cell responses. In this study, we have investigated the ability of Thy-1 to substitute for traditional signal 1 in the context of costimulation provided by dendritic cells. Dendritic cells dramatically enhanced T cell proliferation and IL-2 synthesis in response to Thy-1 triggering by anti-Thy-1 mAb. This effect was not dependent on dendritic cell Fcgamma receptors, but was a result of B7-mediated costimulation (signal 2). T cells were also activated when microbeads coated with a combination of anti-Thy-1 and anti-CD28 mAbs were used to supply signals 1 and 2, respectively. Thy-1-stimulated T cells adhere to target cells and express perforin, granzyme B, and Fas ligand, but fail to kill target cells due to an inability to reorganize their secretion machinery. Moreover, in contrast to TCR signaling, Thy-1 triggering failed to induce cytotoxicity in redirected lysis assays. We conclude that Thy-1 triggering can partially substitute for signal 1, which, in combination with a strong signal 2, leads to robust T cell proliferation, IL-2 synthesis, and cytotoxic effector molecule expression, but does not induce cytolytic function. The block at the level of cytotoxic effector function that results when T cells are activated in the absence of a classical, Ag-specific signal 1 may constitute a mechanism to ensure the specificity of CTL responses and prevent potentially harmful promiscuous cytotoxicity.