CD8+ T cells are crucial for host defense against pathogens and tumors. Upon, antigen recognition, CD8+ T cells proliferate and acquire effector functions. Effector CD8+ T cells require distinct costimulatory receptors at different differentiation stages that are involved in cell expansion, cytokine secretion and cytolytic activity. NKG2D is an activating costimulatory receptor of CD8+ T cells important for promoting effector responses of these cells to autoimmunity, virus infection and tumor immunity. CD8+ T cell responses are also counterbalanced by various suppressive immune factors such as TGF-β1 or CD4+CD25+ regulatory T cells which plays a central role in maintenance of peripheral immune tolerance. We investigated whether NKG2D stimulation leads to induction of additional costimulatory receptors such as CD137 and CD30, which are important for the fate of effector functions and whether these NKG2D-mediated effects are affected by TGF-β1, using exclusively naïve CD8+ T cells isolated from human umbilical cord blood. Following stimulation of NKG2D on naïve CD8+ T cells with anti-NKG2D or co-culture with C1R and K562 tumor cell lines expressing MHC class I-related chain (MIC), a ligand for NKG2D, in the presence of anti-CD3, we examined induction profiles of CD137 and CD30, levels of granzyme B production, and cytotoxic activities against the tumor cell lines. Even though naïve CD8+ T cells from umbilical cord blood are hyporesponsive to anti-CD3, costimulation of NKG2D readily activated CD8+ T cells and induced CD137 expression on cell surface. As a result of the NKG2D receptor ligation, NKG2D rapidly disappeared from the cell surface but gradually reappeared upon continuous CD3 stimulation. Unexpectedly, costimulation of CD137 with CD3 inhibited restoration of NKG2D on the surface of CD8+ T cells while further increasing CD137 expression by a positive feedback response. These CD137+CD8+ T cells generated by NKG2D stimulation were potent in cytotoxicity and produced high levels of granzyme B in response to CD137 costimulation. NKG2D-induced CD137 expression was greatly compromised by TGF-β1. Unlike CD137, CD30, similar in molecular structure and belonging to the same TNF receptor family, was not induced by NKG2D stimulation. However, TGF-β1, which suppressed CD137 expression, appeared to be essential for NKG2D to induce CD30. TGF-β1 alone did not induce CD30 expression, suggesting TGF-β1 has a regulatory role for NKG2D in CD30 induction. Moreover, both CD30 and CD137 stimulation lowered effector functions compared to CD137 alone, suggesting that CD30 plays a negative role in CD137 costimulation. Our results suggest that a dichotomy between differential CD137 and CD30 induction on CD8+ T cells after NKG2D stimulation may be important for the ultimate fate of the effector functions. TGF-β1 may be involved in regulating NKG2D-mediated effects on effector CD8+ T cell development by induction of CD30 and reciprocal suppression of CD137 expression.