CD28 and CTLA-4 (CD152) play a pivotal role in the regulation of T cell activation. Upon ligation by CD80 (B7-1) or CD86 (B7-2), CD28 induces T cell proliferation, cytokine production, and effector functions, whereas CTLA-4 signaling inhibits expansion of activated T cells and induces tolerance. Therefore, we hypothesized that co-stimulatory molecules that preferentially bind CD28 or CTLA-4 would have dramatically altered biological properties. We describe directed molecular evolution of CD80 genes derived from human, orangutan, rhesus monkey, baboon, cat, cow, and rabbit by DNA shuffling and screening. In contrast to wild-type CD80, the evolved co-stimulatory molecules, termed CD28-binding protein (CD28BP) and CTLA-4-binding protein (CTLA-4BP), selectively bind to CD28 or CTLA-4, respectively. Furthermore, CD28BP has improved capacity to induce human T cell proliferation and interferon-␥ production compared with wild-type CD80. In contrast, CTLA-4BP inhibited human mixed leukocyte reaction (MLR) and enhanced interleukin 10 production in MLR, supporting a role for CTLA-4BP in inducing T cell anergy and tolerance. In addition, co-stimulation of purified human T cells was significantly suppressed when CTLA-4BP was cotransfected with either CD80 or CD28BP. The amino acid sequences of CD28BP and CTLA-4BP were 61 and 96% identical with that of human CD80 and provide insight into the residues that are critical in the ligand binding. These molecules provide a new approach to characterization of CD28 and CTLA-4 signals and to manipulation of the T cell response.T cell response is dependent on complex integration of antigen-specific and nonspecific extracellular and intracellular signals. The specificity of the response is determined by recognition of an antigenic peptide in the context of major histocompatibility complex on the plasma membrane of antigen-presenting cells, such as monocytes, dendritic cells, Langerhans cells, or primed B cells. However, a second signal, mediated by co-stimulatory molecules expressed on antigenpresenting cells, is required for induction of a complete T cell response (1-3). The most extensively studied co-stimulatory molecules are CD80 (B7-1) and CD86 (B7-2), which bind the CD28 and CTLA-4 (CD152) ligands expressed on CD4 ϩ and CD8 ϩ T cells. Additional co-stimulatory molecule-ligand pairs such as ICOS-B7-H and PD1-PDL have recently been identified, further illustrating the complexity of the signals that regulate the function of T cells (1-3). Co-stimulatory signal in addition to the T cell receptor signal is a prerequisite for induction of optimal T activation, proliferation, cytokine production, and effector functions.The functional characterization of CD80, CD86, CD28, and CTLA-4 has also illustrated the delicate balance between positive and negative signals mediated through CD28 and CTLA-4, respectively. Upon ligation by CD80 or CD86, CD28 synergizes with T cell receptor signaling to induce activation of both CD4 ϩ and CD8 ϩ T cells (4 -7), whereas CTLA-4 ligation inhibits expansion of...