CTLA4 is a cell surface molecule that shares 30% homology with CD28 and binds B7 family members with high affinity. Analysis of surface expression on murine T cells revealed up-regulation after stimulation with anti-CD3 mAb in vitro and further augmentation after the addition of exogenous IL-2 or anti-CD28 mAb. The effects of IL-2 and anti-CD28 mAb were additive and in part independent, as anti-CD28 mAb increased anti-CD3 mAb-induced T cell CTLA4 expression in IL-2-deficient mice. In contrast, CTLA4 expression was only minimally augmented by the addition of IL-4, IL-6, IL-7, or IL-12. Expression of CTLA4 induced by anti-CD3 mAb was inhibited by anti-IL-2 plus anti-IL-2R mAbs. Inasmuch as these agents prevented T cell proliferation, the effects of cell cycle inhibitors also were examined. Drugs blocking at G1 (cyclosporin A, mimosine) or S (hydroxyurea) phase inhibited the up-regulation of CTLA4 induced by anti-CD3 mAb, suggesting that entry into the cell cycle was necessary to increase the expression of CTLA4. The kinetics of intracellular expression of CTLA4 after stimulation with anti-CD3 mAb paralleled those of surface expression, but surprisingly, much more CTLA4 was localized in the cytoplasm of T lymphocytes than on the cell surface at each time point. Importantly, surface CTLA4 was rapidly internalized intracellularly, which may explain the low levels of expression generally detected on the cell surface. We conclude that both CD28 and IL-2 play important roles in the up-regulation of CTLA4 expression. In addition, the cell surface accumulation of CTL4 appears to be primarily regulated by its rapid endocytosis.