Thy-1 (CD90) expressed by mouse T cells is known to have signal transducing properties, but the ability of Thy-1 to enhance cytotoxic T lymphocyte (CTL) development is not well understood. Here we show that stimulation of mouse T cells with monoclonal antibodies (mAb) to CD3, CD28 and Thy-1 (clone G7), which were coimmobilized on polystyrene microbeads, resulted in a greater proliferative response than stimulation with only anti-CD3 and anti-CD28 mAb, indicating that Thy-1 cross-linking enhanced T cell receptor/CD28-driven T cell activation. Consistent with this finding, Thy-1 blockade with a soluble nonactivating anti-Thy-1 mAb (clone 30-H12) inhibited anti-CD3-induced proliferation of CD4+ and CD8+ T cells, and the induction of cytotoxic effector cells in a dose-dependent fashion. Interleukin-2 synthesis and CD25 expression were also impaired by Thy-1 blockade. The inhibitory effect involved a defect at or before the level of protein kinase C activation because the addition of phorbol ester ablated the anti-Thy-1-mediated inhibition of anti-CD3-induced T cell activation. The CTL that were induced in the presence of blocking anti-Thy-1 mAb adhered to target cells but showed reduced expression of granzyme B and perforin. In contrast, Fas ligand expression and function was not affected by Thy-1 blockade. We conclude that Thy-1 signalling promotes the in vitro generation of CTL that kill in a granule-dependent fashion.