CD28 and CTLA-4 are related receptors that differentially regulate T cell activation. Despite the fact that they bind the same ligands, CD28 is a classical costimulator enhancing proliferation whereas CTLA-4 appears to perform negative regulatory functions. In this study, we have utilized the natural ligand for CD28 and CTLA-4 (CD80) to determine under what circumstances positive and negative effects are operative. We show here that the stimulation of purified human T cells with phorbol ester and ionomycin is inhibited in the presence of Chinese hamster ovary (CHO) cells expressing CD80. This inhibition is reversed by blocking with both anti-CD80 or Fab fragments of anti-CTLA-4 but also requires CD28 engagement. Furthermore, we show that the inhibitory function of CD80 requires elevated intracellular calcium since inhibition was observed only in the presence of ionomycin. In the absence of intracellular calcium elevation, CTLA-4 was not expressed at the cell surface, and CD80 acted positively as a costimulator of T cells, via CD28. These results demonstrate that the natural ligand CD80 can either costimulate or inhibit T cell responses depending on the conditions of T cell stimulation.