Although both CD28 and ICOS bind PI3K and provide stimulatory signal for T cell activation, unlike CD28, ICOS does not costimulate IL-2 secretion. CD28 binds both PI3K and Grb2, whereas ICOS binds only PI3K. We have generated an ICOS mutant, which can bind Grb2 by replacement of its PI3K binding motif YMFM with the CD28 YMNM motif, and shown that it induces significant activation of the IL-2 promoter. However, this mutant ICOS was insufficient to activate the NF-kappaB pathway. In this study, we show that Gads, but not Grb2, is essential for CD28-mediated NF-kappaB activation, and its binding to CD28 requires the whole CD28 cytoplasmic domain in addition to the YMNM motif. Mutagenesis experiments have indicated that mutations in the N-terminal and/or C-terminal PXXP motif(s) of CD28 significantly reduce their association with Gads, whereas their associations with Grb2 are maintained. They induced strong activity of the NFAT/AP-1 reporter comparable with the CD28 wild type, but weak activity of the NF-kappaB reporter. Grb2- and Gads-dominant-negative mutants had a strong effect on NFAT/AP-1 reporter, but only Gads-dominant-negative significantly inhibited NF-kappaB reporter. Our data suggest that, in addition to the PI3K binding motif, the PXXP motif in the CD28 cytoplasmic domain may also define a functional difference between the CD28- and ICOS-mediated costimulatory signals by binding to Gads.