The induction of effective immune responses requires costimulation by B7 molecules, and Ag recognition without B7 is thought to result in no response or tolerance. We compared T cell responses in vivo to the same Ag presented either by mature dendritic cells (DCs) or as self, in the presence or absence of B7. We show that Ag presentation by mature B7-1/2-deficient DCs fails to elicit an effector T cell response but does not induce tolerance. In contrast, using a newly developed adoptive transfer system, we show that naive OVA-specific DO11 CD4+ T cells become anergic upon encounter with a soluble form of OVA, in the presence or absence of B7. However, tolerance in DO11 cells transferred into soluble OVA transgenic recipients can be broken by immunization with Ag-pulsed DCs only in B7-deficient mice and not in wild-type mice, suggesting a role of B7 in maintaining tolerance in the presence of strong immunogenic signals. Comparing two double-transgenic models--expressing either a soluble or a tissue Ag--we further show that B7 is not only essential for the active induction of regulatory T cells in the thymus, but also for their maintenance in the periphery. Thus, the obligatory role of B7 molecules paradoxically is to promote effective T cell priming and contain effector responses when self-Ags are presented as foreign.