The destiny of activated T cells is critical to the ultimate fate of immune response. After encountering antigen, naïve T cells receive signal 1 through the T‐cell receptor (TCR)‐major histocompatibility complex (MHC) plus antigenic peptide complex and signal 2 through ‘positive’ costimulatory molecules leading to full activation. ‘Negative’ T‐cell costimulatory pathways, on the other hand, function to downregulate immune responses. The purpose of this article is to review the current state of knowledge and recent advances in our understanding of the functions of the positive and negative T‐cell costimulatory pathways in alloimmune responses. Specifically, we discuss the functions of the CD28:B7 and the tumor necrosis factor receptor (TNFR):tumor necrosis factor (TNF) family of molecules in allograft rejection and tolerance. We address the following important questions: are T‐cell costimulatory pathways merely redundant or do they provide distinct and unique functions? What are the important and unique interactions between the various pathways? And, what are the effects and mechanisms of targeting of these pathways in different types and patterns of allograft rejection and tolerance models?