CD26 is a T-cell costimulatory molecule with dipeptidyl peptidase IV enzyme activity in its extracellular region. We have previously reported that the addition of recombinant soluble CD26 resulted in enhanced proliferation of human T lymphocytes induced by the recall antigen tetanus toxoid (TT) via upregulation of CD86 on monocytes and that caveolin-1 was a binding protein of CD26, and the CD26-caveolin-1 interaction resulted in caveolin-1 phosphorylation (p-cav-1) as well as TT-mediated T-cell proliferation. However, the mechanism involved in this immune enhancement has not yet been elucidated. In the present work, we perform experiments to identify the molecular mechanisms by which p-cav-1 leads directly to the upregulation of CD86. Through proteomic analysis, we identify Tollip (Toll-interacting protein) and IRAK-1 (interleukin-1 receptorassociated serine/threonine kinase 1) as caveolin-1-interacting proteins in monocytes. We also demonstrate that following stimulation by exogenous CD26, Tollip and IRAK-1 dissociate from caveolin-1, and IRAK-1 is then phosphorylated in the cytosol, leading to the upregulation of CD86 via activation of NF-B. Binding of CD26 to caveolin-1 therefore regulates signaling pathways in antigen-presenting cells to induce antigenspecific T-cell proliferation.CD26 is a widely distributed 110-kDa cell surface glycoprotein with known dipeptidyl peptidase IV (DPPIV) (EC 3.4.14.5) activity in its extracellular domain (16,38). This enzyme is capable of cleaving amino-terminal dipeptides with either L-proline or L-alanine at the penultimate position. While CD26 expression is enhanced following activation of resting T cells, CD4 ϩ CD26 high T cells respond maximally to recall antigens such as tetanus toxoid (TT) (39). Cross-linking of CD26 and CD3 with solid-phase immobilized monoclonal antibodies (MAbs) can induce T-cell costimulation and interleukin-2 (IL-2) production by either human CD4 ϩ T cells or Jurkat T-cell lines transfected with CD26 cDNA (16,56). In addition, anti-CD26 antibody treatment of T cells leads to a decrease in the surface expression of CD26 via its internalization, and such modulation results in an enhanced proliferative response to anti-CD3 or anti-CD2 stimulation as well as enhanced tyrosine phosphorylation of signaling molecules such as CD3 and p56-Lck (19). Moreover, we showed that DPPIV enzyme activity is required for CD26-mediated T-cell costimulation and various immune responses (23,45,58). We have recently shown that internalization of CD26 after cross-linking is mediated in part by the mannose-6-phosphate/insulin-like growth factor II receptor and that the interaction of CD26 and the mannose-6-phosphate/insulin-like growth factor II receptor plays a role in CD26-induced T-cell costimulation (20).In a recent study, we demonstrated that caveolin-1 is a binding protein of CD26 and that CD26 on activated memory T cells interacts with caveolin-1 on TT-loaded monocytes (43). In this interaction, the scaffolding domain (SCD) of caveolin-1, comprising residues 82 to 101...