To better define important cell subsets expressing activation markers in rheumatoid arthritis (RA), we compared selective lymphocyte and monocyte B7H1, B7H2, B7RP.1, B7RP.2, and inducible costimulatory molecule (ICOS) expression from normal peripheral blood (NL PB), RA PB, and RA synovial fluid (SF) by multicolor flow cytometry and immunohistochemistry. RA SF memory lymphocytes expressed B7RP.1 and B7RP.2, suggesting that T‐cells may function as antigen presenting cells (APCs) in RA joints. We found similar results for ICOS expression. RA SF CD14+ monocytes also expressed B7RP.1 (an ICOS ligand) and the homologous ligand B7RP.2, identifying monocytes as potential mediators of antigen processing and lymphocyte activation in RA. Furthermore, we found an increased population of RA SF CD14+ monocytes expressing B7H1 and B7H2. [The FACS analysis was supported by immunohistochemistry, showing intense lymphocyte and APC (macrophages with dendritic morphology) ICOS staining in RA synovial tissue (ST). Overall, these results define elevated populations of memoryT‐lymphocytes expressing proinflammatory B7 molecules in RA SF that either stimulate T cells through ICOS (via ICOS ligands B7RP.1 and B7RP.2), or down‐regulate RA ST T‐lymphocytes through B7H1 and B7H2.] Therefore, in the same joint, there may exist positive and negative influences on the inflammatory response, and perhaps, the negative signals dominate as joint inflammation resolves. © 2007 International Society for Analytical Cytology