The mechanism of CD40 ligand (CD40L)-mediated in vivo activation of CD4⁺ T cells was examined by investigation of the development of experimental allergic encephalomyelitis (EAE) in CD40L-deficient mice that carried a transgenic T cell receptor specific for myelin basic protein. These mice failed to develop EAE after priming with antigen, and CD4⁺ T cells remained quiescent and produced no interferon-γ (IFN-γ). T cells were primed to make IFN-γ and induce EAE by providing these mice with B7.1⁺ antigen-presenting cells (APCs). Thus, CD40L is required to induce costimulatory activity on APCs for in vivo activation of CD4⁺ T cells to produce IFN-γ and to evoke autoimmunity.