Theiler's murine encephalomyelitis virus (TMEV) is a natural mouse pathogen which causes a lifelong persistent infection of the central nervous system (CNS) accompanied by T-cell-mediated myelin destruction leading to chronic, progressive hind limb paralysis. TMEV-induced demyelinating disease (TMEV-IDD) is considered to be a highly relevant animal model for the human autoimmune disease multiple sclerosis (MS), which is thought to be initiated as a secondary consequence of a virus infection. Although TMEV-IDD is initiated by virus-specific CD4⁺ T cells targeting CNS-persistent virus, CD4⁺ T-cell responses against self myelin protein epitopes activated via epitope spreading contribute to chronic disease pathogenesis. We thus examined the ability of antibodies directed against B7 costimulatory molecules to regulate this chronic virus-induced immunopathologic process. Contrary to previous studies showing that blockade of B7-CD28 costimulatory interactions inhibit the initiation of experimental autoimmune encephalomyelitis, treatment of SJL mice at the time of TMEV infection with murine CTLA-4 immunoglobulin or a combination of anti-B7-1 and anti-B7-2 antibodies significantly enhanced clinical disease severity. Costimulatory blockade inhibited early TMEV-specific T-cell and antibody responses critical in clearing peripheral virus infection. The inhibition of virus-specific immune responses led to significantly increased CNS viral titers resulting in increased damage to myelin-producing oligodendrocytes. Following clearance of the costimulatory antagonists, epitope spreading to myelin epitopes was accelerated as a result of the increased availability of myelin epitopes leading to a more severe chronic disease course. Our results raise concern about the potential use of B7-CD28 costimulatory blockade to treat human autoimmune diseases potentially associated with acute or persistent virus infections.