Efficient T cell activation is dependent on the intimate contact between antigen-presenting cells (APCs) and T cells. The engagement of the B7 family of molecules on APCs with CD28 and CD152 (cytotoxic T lymphocyte–associated antigen 4 [CTLA-4]) receptors on T cells delivers costimulatory signal(s) important in T cell activation. We investigated the dependence of pathologic cellular activation in psoriatic plaques on B7-mediated T cell costimulation. Patients with psoriasis vulgaris received four intravenous infusions of the soluble chimeric protein CTLA4Ig (BMS-188667) in a 26-wk, phase I, open label dose escalation study. Clinical improvement was associated with reduced cellular activation of lesional T cells, keratinocytes, dendritic cells (DCs), and vascular endothelium. Expression of CD40, CD54, and major histocompatibility complex (MHC) class II HLA-DR antigens by lesional keratinocytes was markedly reduced in serial biopsy specimens. Concurrent reductions in B7-1 (CD80), B7-2 (CD86), CD40, MHC class II, CD83, DC–lysosomal-associated membrane glycoprotein (DC-LAMP), and CD11c expression were detected on lesional DCs, which also decreased in number within lesional biopsies. Skin explant experiments suggested that these alterations in activated or mature DCs were not the result of direct toxicity of CTLA4Ig for DCs. Decreased lesional vascular ectasia and tortuosity were also observed and were accompanied by reduced presence of E-selectin, P-selectin, and CD54 on vascular endothelium. This study highlights the critical and proximal role of T cell activation through the B7-CD28/CD152 costimulatory pathway in maintaining the pathology of psoriasis, including the newly recognized accumulation of mature DCs in the epidermis.