Although thalidomide (Thal) does not directly induce T-cell activation, it increases proliferation of T cells following CD3 activation. In this study, we examined the immunomodulatory effects of a more potent analog of Thal, immunomodulatory drug (IMiD), on T cells. Although IMiD3 does not directly stimulate proliferation of normal donor CD3+ T cells, it significantly costimulates proliferation of CD3+ T cells induced by CD3 ligation (stimulation index [SI], 2.4), immature dendritic cells (DCs; SI, 2.1), and mature DCs (SI, 2.6). T-cell proliferation triggered by DCs was abrogated by cytotoxic T lymphocyte antigen 4-immunoglobulin (CTLA-4-Ig), and IMiD3 partially overcomes this inhibitory effect. IMiD3 also overcomes the inhibitory effects of CTLA-4-Ig on Epstein-Barr virus (EBV) and influenza (Flu)-specific CD4 and CD8 T-cell responses, as measured by cytokine capture and enzyme-linked immunosorbent spot (ELISPOT) assay. IMiD3 did not induce up-regulation of CD28 expression on T cells, or of CD80-CD86 expression on dendritic cells. Importantly, IMiD3 triggers tyrosine phosphorylation of CD28 on T cells, followed by activation of nuclear factor kappaB (NF-kappaB), a known downstream target of CD28 signaling. These results therefore define the costimulatory mechanism whereby IMiD3 induces T-cell activation and provide the cellular and molecular basis for use of IMiD3 as an adjuvant in immunotherapeutic treatment strategies for multiple myeloma.