We identify a B7 family molecule, B7-H4, by protein sequence analysis and comparative molecular modeling. While B7-H4 mRNA is widely distributed in mouse and human peripheral tissues, cell surface expression of B7-H4 protein is limited and shows an inducible pattern on hematopoietic cells. Putative receptor of B7-H4 can be upregulated on activated T cells. By arresting cell cycle, B7-H4 ligation of T cells has a profound inhibitory effect on the growth, cytokine secretion, and development of cytotoxicity. Administration of B7-H4Ig into mice impairs antigen-specific T cell responses whereas blockade of endogenous B7-H4 by specific monoclonal antibody promotes T cell responses. B7-H4 thus may participate in negative regulation of cell-mediated immunity in peripheral tissues.