Recent evidence indicates that membrane-bound costimulatory molecules of the B7 family are important for T-cell activation and are upregulated in IFN gamma-stimulated human microglia and in multiple sclerosis active lesions. In this study we have performed a detailed analysis of B7-1 and B7-2 expression and regulation in cultured mouse glial cells using immunocytochemical and semi-quantitative reverse transcriptase-polymerase chain reaction techniques. In an immortalized mouse microglial cell line (BV-2), expression of B7-1 and B7-2 was enhanced by interferon-gamma (IFN gamma). IFN gamma was a weak inducer of B7-2 mRNA and immunoreactivity in microglia primary cultures obtained from the neonatal mouse brain, whereas lipopolysaccharide, tumour necrosis factor-alpha, colony-stimulating factors and interleukin-1 beta did not affect microglial B7-2 expression. Combined IFN gamma and lipopolysaccharide treatment very effectively upregulated the B7-2 gene expression and immunoreactivity in microglia, but not in astrocytes. In both glial cell types, expression of B7-1 was not induced by any of the above agents. Among known microglia/macrophage deactivators, interleukin-10, prostaglandin E2 and cAMP-elevating agents, but not transforming growth factor-beta 1 and interleukin-4, inhibited B7-2 transcripts and immunoreactivity in IFN gamma/LPS-stimulated microglia, thus suggesting possible paracrine and autocrine mechanisms for regulating the expression of this important T-cell costimulatory signal in the brain.