A body of evidence indicates that expression of the programmed cell death 1 (PD-1) receptor by activated T cells plays an important role in the down-regulation of immune responses; however, the functions of its known ligands, B7-H1 (PD-L1) and B7-dendritic cell (DC; PD-L2), at the effector phase of immune responses are less clear. In the current study, we investigated the roles of B7-H1 in DC-mediated regulation of hapten-activated T cells and the delayed-type contact hypersensitivity response in primed animals. We found that the expression of B7-H1 and B7-DC was induced on activation of DC by hapten stimulation. Blockade of B7-H1, but not B7-DC, enhanced the activity of hapten-specific T cells. Interaction with a DC line that expresses high cell-surface levels of B7-H1 (B7-H1/DC) suppressed the proliferation of, and cytokine production by, activated T cells. In vivo administration of hapten-carrying B7-H1/DC desensitized the response of sensitized animals to hapten challenge, and this desensitization was hapten-specific. These data indicate that B7-H1 expressed by DC mediates inhibitory signals for activated T cells and suppresses the elicitation of immune responses. The ability of B7-H1/DC to inhibit the function of preactivated T cells in vivo suggests novel strategies for the treatment of immune response-mediated disorders.