To study mechanisms of peripheral self-tolerance, we injected small numbers of naive CD4+ TCR-transgenic T cells into mice expressing the MHC/peptide ligand under the control of an MHC class II promoter. The donor T cells expand rapidly to very large numbers, acquire memory markers, and go out into tissues, but the animals remain healthy, and the accumulated T cells are profoundly anergic to restimulation with Ag in vitro. Provision of a costimulatory signal by coinjection of an agonist Ab to OX40 (CD134), a TNFR family member expressed on activated CD4 T cells, results in death of the mice within 12 days. TCR-transgenic T cells recovered at 5 days from anti-OX40-treated mice have a unique phenotype: they remain unresponsive to Ag in vitro, but they are larger, more granular, and strongly IL-2R positive. Some spontaneously secrete IFN-γ directly ex vivo, and the majority make IFN-γ in response to PMA and ionomycin. Although they are anergic by conventional tests requiring Ag recognition, they respond vigorously to cytokines, proliferating in response to IL-2, and secreting IFN-γ when TCR signaling is bypassed with IL-12 and IL-18. We conclude that the costimulatory signal through OX40 allows otherwise harmless, proliferating, autoreactive T cells to acquire effector cell functions. The ability of these T cells to respond to cytokines by synthesizing additional inflammatory cytokines without a TCR signal may drive the fatal pathogenic process in vivo.