Recent studies have suggested that soluble forms of B7-1 and B7-2 may exist, but transcripts that code for these molecules have not been previously described. In this study, we report the cloning and characterization of an alternatively spliced soluble form of porcine B7-1 (sB7-1) that lacks exons coding for both the transmembrane and cytoplasmic domains. Northern blot analysis of RNA from alveolar macrophages revealed an approximate 3:1 ratio of the transmembrane form of B7-1 mRNA relative to sB7-1 mRNA. Porcine B7-1 was present on the surface of both B and T cells following stimulation with PMA/ionomycin. A histidine-tagged form of porcine sB7-1 (sB7-1-His) interacted with both CD28 and CTLA-4, and effectively blocked IL-2 production from human responder cells stimulated with PHA and either porcine or human stimulator cells. In addition, sB7-1-His inhibited human T cell proliferation in response to porcine or human peripheral blood leukocytes. This study is the first report of an alternatively spliced form of B7 that codes for a soluble protein. Furthermore, these data demonstrate that porcine B7-1 interacts with the human receptors CD28 and CTLA-4, suggesting a potential role for this molecule in pig to human xenotransplantation. Possible physiological functions for the soluble form of B7-1 are discussed.