B7-H1 was originally identified by homology analysis in comparison with B7-1 and B7-2, two molecules with important immunoregulatory functions. B7-H1, however, was broadly induced in the majority of peripheral tissues as well as hematopoietic cells. Upon binding to an as yet unidentified costimulatory receptor on primed T-cells, B7-H1 costimulates T-cell proliferation and preferentially induces interleukin 10 and interferon gamma. The costimulatory function of B7-H1 may be critical for enhancing maturation and differentiation of T-cells in lymphoid organs. Conversely, by binding to programmed death 1 receptors on activated T-cells and B-cells, B7-H1 may inhibit ongoing T-cell responses in peripheral tissues by inducing apoptosis and arresting cell-cycle progression. Although a positive regulatory role of B7-H1 has been demonstrated in vitro and in various animal models, a negative regulatory role of B7-H1 has also been documented in human diseases, including cancer, rheumatoid arthritis, and human immunodeficiency virus infection. Delineation of the complex interactions between B7-H1 and its receptors as well as its interplay with other ligands is critical for understanding this new immunoregulatory system. Precise manipulation of B7-H1 and its receptors may provide unique opportunities for designing new disease treatments.