Because keratinocytes are tolerogenic antigen-presenting cells (APC), we investigated the role of B7/BB-1 in reconstituting defective accessory cell (AC) and APC functions by such nonlymphoid cells. KC were induced to stably express B7/BB-1 by DNA-mediated gene transfection. This single-transformed B7/BB-1+ A431 cell line (but not control A431) functioned as AC for lectin-induced T-cell proliferation, as well as oxidative mitogenesis. This costimulation was dependent on B7/BB-1 expression since the monoclonal antibody BB-1 blocked costimulation of PHA mitogenesis by 75%. After the induction of class II MHC antigen expression by interferon-gamma, B7/BB-1+ KC but not control KC presented alloantigens to resting T-cells in the primary mixed lymphocyte reaction. These data indicate that the stable expression of B7/BB-1 antigen by KC reconstitutes defective AC and alloantigen-presenting activity. The lack of expression of such second signal by normal KC may be responsible for their ability to induce clonal anergy in vitro and in vivo.