In this study, we have examined the expression and function of B7/BB-1 on individual glial cells, by utilizing surgically resected adult human central nervous system (CNS) tissues, tissues derived from fetal human CNS, and pathology material from cases of multiple sclerosis (MS). Immunofluorescence analysis using enriched adult human derived cultures of microglia and oligodendrocytes, and mixed microglia/astrocyte cultures, demonstrated that B7/BB-1 was expressed on microglia. Adult human-derived oligodendrocytes and astrocytes, and human fetal astrocytes were B7/BB-1 negative under all culture conditions. Flow cytometry studies demonstrated a low basal level of B7/BB-1 expression on microglia that was up-regulated following incubation with interferon-gamma (IFN-gamma). Co-culture of purified fresh allogeneic CD4+ T cells with microglia for 24 h resulted in clustering of T cells around microglia and microglial B7/BB-1 expression. Preincubation of microglia with an anti BB-1 monoclonal antibody (mAb) prior to microglia: CD4+ T cell co-cultures resulted in partial inhibition of the ability of microglia both to present recall antigen to autologous CD4+ T cells and to present antigen to allogeneic CD4+ T cells in primary mixed lymphocyte reaction (1 degree MLR). The CTLA-4 Ig fusion protein inhibited the ability of microglia to present antigen in both antigen presentation assays to an even greater extent than did the anti BB-1 mAb. The BB-1 antibody also inhibited the ability of microglia to stimulate previously activated T cells in a secondary 2 degrees MLR. In sections of multiple sclerosis brain, B7/BB-1 expression was observed on activated microglia in select parenchymal lesions, and on perivascular cells and infiltrating monocytes. B7/BB-1 immunoreactivity was not found in normal appearing white matter from MS brain or from non-inflammatory brain specimens. Our results indicate that the B7/BB-1 molecule plays a functional role in the capacity of microglia to serve as CNS antigen-presenting cells that can both initiate and perpetuate CD4+ T cell activation.