During activation, T cells express receptors for receiving positive and negative costimulatory signals. Here we identify the B and T lymphocyte attenuator (BTLA), an immunoglobulin domain-containing glycoprotein with two immunoreceptor tyrosine-based inhibitory motifs. BTLA is not expressed by naive T cells, but it is induced during activation and remains expressed on T helper type 1 (TH1 but not TH2 cells. Crosslinking BTLA with antigen receptors induces its tyrosine phosphorylation and association with the Src homology domain 2 (SH2)-containing protein tyrosine phosphatases SHP-1 and SHP-2, and attenuates production of interleukin 2 (IL-2). BTLA-deficient T cells show increased proliferation, and BTLA-deficient mice have increased specific antibody responses and enhanced sensitivity to experimental autoimmune encephalomyelitis. B7x, a peripheral homolog of B7, is a ligand of BTLA. Thus, BTLA is a third inhibitory receptor on T lymphocytes with similarities to cytotoxic T lymphocyte-associated antigen 4 (CTLA-4) and programmed death 1 (PD-1).