Recently, there has been increasing interest in the inhibitory regulators of lymphocyte activation, and in particular, the role of CD28 homologue CTLA-4 in the regulation of T cell responses. Interaction of CTLA-4 with B7 ligands inhibits T cell responses, including T cell proliferation and interleukin-2 (IL-2) secretion. The mechanism(s) responsible for CTLA-4 signal transduction are unknown, but it has been suggested that tyrosine phosphorylation is involved. Here we demonstrate that phorbol ester phorbol 12-myrislate 13-acetate (PMA), which increases tyrosine phosphorylation by stimulating protein kinase C and p21ras, can overcome the CTLA-4-mediated inhibition of T cell proliferation. This provides the first functional evidence that tyrosine phosphorylation is involved in CTLA-4 signal transduction. Most interestingly, CTLA-4-mediated inhibition of IL-2 secretion was not influenced by the presence of PMA. Further, we demonstrate that CTLA-4 cross-linking inhibits proliferation and IL-2 secretion of T cells from motheaten mice. These mice lack PTP-1C, a tyrosine phosphatase which mediates in a number of lymphocyte inhibitory responses, indicating that PTP-1C is not essential for CTLA-4 signaling. Collectively, these results demonstrate that regulation of tyrosine phosphorylation plays a pivotal role in CTLA-4 function, and that the inhibition of the transition from G0/G1 to the S phase of the cell cycle and the inhibition of IL-2 secretion require distinct signaling pathways. These experiments provide a useful model system which can be used to elucidate the signaling pathways involved in CTLA-4 function and to understand how CTLA-4, CD28 and Tcell receptor-mediated signals are integrated in T cell responses to antigen.