Decay-accelerating factor (Daf) dissociates C3/C5 convertases that assemble on host cells and thereby prevents complement activation on their surfaces. We demonstrate that during primary T cell activation, the absence of Daf on antigen-presenting cells (APCs) and on T cells enhances T cell proliferation and augments the induced frequency of effector cells. The effect is factor D- and, at least in part, C5-dependent, indicating that local alternative pathway activation is essential. We show that cognate T cell–APC interactions are accompanied by rapid production of alternative pathway components and down-regulation of Daf expression. The findings argue that local alternative pathway activation and surface Daf protein function respectively as a costimulator and a negative modulator of T cell immunity and explain previously reported observations linking complement to T cell function. The results could have broad therapeutic implications for disorders in which T cell immunity is important.