Understanding the regulatory events involved in the activation and inactivation of T cells is crucial to develop therapeutic approaches for autoimmune diseases and for organ transplantation. Co-stimulatory signals delivered through the CD28 receptor and inhibitory signals through CTLA-4 are required for the proper modulation of T cell responses and the induction and maintenance of peripheral tolerance. Manipulation of these signals is emerging as a potential strategy to prevent allograft rejection in different animal models. Recent data on the compartmentalization and the structural features of CTLA-4 within T cells provides critical information not only on the molecular basis of T cell inactivation by CTLA-4, but also on the key requirements for the successful development of therapeutic strategies targeting this molecule.