Several recent studies demonstrate that B7.2, but not B7.1, play an important role in allergic inflammation and IgE production. Agents that down‐regulate B7.2 may therefore be of benefit for the treatment of Th2‐driven allergic diseases. Our current study was carried out to investigate the effect of immunosuppressive agents, cyclosporin A (CsA) and dexamethasone, on B7.2 and B7.1 expression on B cells stimulated with the superantigen, toxic shock syndrome toxin‐1 (TSST‐1). The analysis of B7.2 and B7.1 on the same cells by flow cytometry demonstrated that TSST‐1 up‐regulated B7.2⁺B7.1⁻ but not B7.1⁺B7.2⁻ on B cells in a dose‐dependent fashion. CsA and dexamethasone significantly down‐regulated B7.2⁺B7.1⁻ but up‐regulated B7.2⁻B7.1⁺ B cells in the presence or absence of TSST‐1 (100 ng/ml). Interestingly, the combination of CsA and dexamethasone was much more potent in the inhibition of B7.2 expression than either of these agents alone. As CD40 is known to up‐regulate B7.2 expression on B cells, the mechanism of B7.2 down‐regulation by CsA and dexamethasone was further studied by investigating the effect of these agents on CD40 expression on B cells. TSST‐1 significantly increased CD40 expression on B cells. However, the addition of CsA or dexamethasone significantly down‐regulated CD40 expression. Anti‐CD40 MoAb significantly reversed the effects of CsA or dexamethasone on B7.2 and B7.1 expression, suggesting that T cell engagement of CD40 plays a role in the mechanisms by which CsA and dexamethasone acts on B cells. These data demonstrate the modulatory effect of CsA and dexamethasone on B7.2 and B7.1 expression on B cells and the potential role of CD40 in mediating this effect.