The activation of T cells requires two distinct signals. One signal involves interaction of the antigen-specific T-cell receptor with major histocompatibility complex molecules plus antigenic peptide; a second signal, which is antigen nonspecific, is the interaction of CD28 with its natural ligands B7–1 and B7–2/B70. CD28 is expressed on 80% of T cells, is upregulated after activation, and binds to B7 gene-family members, found on antigen-presenting cells. Because of our interest in the immunologic basis of benign and malignant T-cell-mediated disorders of the skin, we investigated the cellular distribution of CD28 and B7 family members in lesions of psoriasis and mycosis fungoides. By immunostaining cryostat sections of skin, CD28 was found to be expressed on virtually all lymphocytes in the epidermis and dermis of both skin diseases. Surprisingly, B7–1 was also found to be expressed on virtually all lymphocytes in the epidermis and dermis of both skin diseases. B7–1 expression was confirmed on CD3+ T lymphocytes using flow cytometry of single cell suspensions of fresh, unfixed psoriatic lesional tissue. To exclude the possibility that this result was caused by a second reagent contaminating the monoclonal antibody (MoAb) preparation, two different lots were used, and the MoAb was absorbed onto Chinese hamster ovary (CHO) transfectants expressing B7–1, or vector-only transfected CHO cells. These procedures confirmed that a B7- 1-like epitope was being recognized on psoriatic lesional T cells. In contrast to B7–1 expression on lymphocytes, B7–3, as defined by anti-BB- 1 MoAb reactivity, was found primarily on epidermal keratinocytes in both skin diseases and was not found on T cells. These results indicate that within two common skin disorders, lesional T cells accumulate in the dermis and epidermis, which express B7–1. Such expression may permit self-costimulation involving the CD28-mediated activation pathway, and thereby contribute to the ongoing T-cell proliferation present in these chronic, benign, and malignant skin diseases.