The process for optimal T-cell activation requires not only engagement of the T-cell receptor/CD3 complex, but also the delivery of additional co-stimulatory signals that synergize with the primary response mediated through the T-cell receptor. Thus, the regulated expression of ligands for such co-stimulatory molecules can be critical in determining whether a cell can effectively activate T cells following the presentation of a foreign antigen. The CD28 antigen has recently been shown to mediate such co-stimulatory signals by interacting with the B7/BB-1 molecule expressed on activated B cells and monocytes. We show in this study that activated keratinocytes, both in vitro and in vivo display a discordance in expression between B7 and BB-1 based on differential monoclonal antibody (MAb) reactivity. Activated keratinocytes in vitro, as well as psoriatic keratinocytes and epithelial cells in the thymus, are reactive with the BB-1 MAb but not anti-B7 MAbs. These BB-1 positive cells fail to express detectable B7 messenger RNA by Northern blot analysis. Furthermore, keratinocytes bind specifically to CD28-transfected COS7 cells, and this binding is inhibited by anti-CD28 and anti-BB-1 but not B7 MAbs. These studies suggest: 1) that the MAb against BB-1 binds a functional epitope on a molecule distinct from B7 as detected on activated keratinocytes in vitro and in vivo and 2) that keratinocytes in skin and epithelial cells in thymus can express cell-surface molecules that might mediate T-cell co-stimulation via CD28.