Despite extensive study, the role of phosphatidylinositol 3-kinase (PI3-kinase) activation in CD28 function has been highly contentious. To definitively address this question, we generated knock-in mice expressing mutations in two critical domains of the cytoplasmic tail of CD28. Mutation of the proximal tyrosine motif interrupted PI3-kinase binding and prevented CD28-dependent phosphorylation of protein kinase B (PKB)/ Akt; however, there was no detectable effect on interleukin-2 (IL-2) secretion, expression of Bcl-XL, or on T-cell function in vivo. Furthermore, we demonstrate that signaling initiated by the C-terminal proline motif is directly responsible for tyrosine phosphorylation of phosphoinosotide-dependent kinase 1, protein kinase Cβ, and glycogen synthase kinase 3β, as well as contributing to threonine phosphorylation of PKB. T cells mutated in this domain were profoundly impaired in IL-2 secretion, and the mice had marked impairment of humoral responses as well as less severe disease manifestations in experimental allergic encephalomyelitis. These data demonstrate that the distal proline motif initiates a critical nonredundant signaling pathway, whereas direct activation of PI3-kinase by the proximal tyrosine motif of CD28 is not required for normal T-cell function.