Activated T cells have been implicated in chronic rhinosinusitis (CRS) and asthma and physically interact with epithelial cells in the airways. We now report that human airway epithelial cells display significant constitutive cell-surface expression of costimulatory ligands, B7-H1, B7-H2, B7-H3, and B7-DC. Expression of B7-H1 and B7-DC was selectively induced by stimulation of either BEAS2B or primary nasal epithelial cells (PNEC) with interferon (IFN)-γ (100 ng/ml). The combination of IFN-γ and tumor necrosis factor-α (100 ng/ml) selectively induced expression better than IFN-γ alone. Fluticasone treatment (10⁻⁷ M) reduced the baseline expression and inhibited the induction of B7-H1 and B7-DC in BEAS2B cells. In vitro exposure of PNEC to IFN-γ also resulted in selective induction of B7-H1 and B7-DC. Monoclonal antibody blockade of B7-H1 or B7-DC enhanced IFN-γ expression by purified T cells in co-culture experiments, suggesting that these two B7 homologs inhibit T cell responses at the mucosal surface. Immunohistochemical staining of human sinonasal surgical tissue confirmed the presence of B7-H1, B7-H2, and B7-H3 in the epithelial cell layer, especially in samples from patients diagnosed with Samter's Triad, a severe form of CRS. Real-time PCR analysis of sinonasal tissue revealed elevated levels of B7-H1 and B7-DC in CRS compared with controls. These results demonstrate that epithelial cells express functional B7 costimulatory molecules and that expression of selected B7 family members is inducible in vitro and in vivo. Epithelial B7 homologs could play a role in regulation of lymphocytic activity at mucosal surfaces.