Natural engagement of CTLA-4 on host B7 limits T cell activation. We hypothesized that therapeutic cross-linking of CTLA-4 in vivo may further inhibit T cell function and prevent allograft rejection. However, none of the currently available CTLA-4-binding reagents have ligating properties when injected in vivo. The observation that surface-immobilized anti-CTLA-4 mAb inhibits T cell activation in vitro prompted us to develop a membrane-bound single-chain anti-CTLA-4 Ab (7M). To model whether tissue expression of 7M could suppress allograft rejection, we examined the ability of H-2L d-specific TCR-transgenic T cells to reject 7M-expressing allogeneic tumor cells injected sc Expression of 7M significantly inhibited allogeneic rejection in mice that received CTLA-4+/+ but not CTLA-4−/− T cells. Furthermore, CTLA-4+/+ T cells that had encountered 7M-expressing tumors in vivo acquired defects in cytokine production and cytotoxicity. Thus, deliberate ligation of CTLA-4 in vivo potently inhibits allogeneic T cell responses.