CTLA-4 (CD152) engagement can down-regulate T cell activation and promote the induction of immune tolerance. However, the strategy of attenuating T cell activation by engaging CTLA-4 has been limited by sharing of its natural ligands with the costimulatory protein CD28. In the present study, a CTLA-4-specific single-chain Ab (scFv) was developed and expressed on the cell surface to promote selective engagement of this regulatory molecule. Transfectants expressing anti-CTLA-4 scFv at their surface bound soluble CTLA-4 but not soluble CD28. Coexpression of anti-CTLA-4 scFv with anti-CD3ε and anti-CD28 scFvs on artificial APCs reduced the proliferation and IL-2 production by resting and preactivated bulk T cells as well as CD4+ and CD8+ T cell subsets. Importantly, expression of anti-CTLA-4 scFv on the same cell surface as the TCR ligand was essential for the inhibitory effects of CTLA-4-specific ligation. CTLA-4-mediated inhibition of tyrosine phosphorylation of components of the proximal TCR signaling apparatus was similarly dependent on coexpression of TCR and CTLA-4 ligands on the same surface. These findings support a predominant role for CTLA-4 function in the modification of the proximal TCR signal. Using T cells from DO11. 10 and 2C TCR transgenic mice, negative regulatory effects of selective CTLA-4 ligation were also demonstrated during the stimulation of Ag-specific CD4+ and CD8+ T cells by MHC/peptide complexes. Together these studies demonstrate that selective ligation of CTLA-4 using a membrane-bound scFv results in attenuated T cell responses only when coengaged with the TCR during T cell/APC interaction and define an approach to harnessing the immunomodulatory potential of CTLA-4-specific ligation.