Scurfy mice develop CD4 T-cell-mediated lymphoproliferative disease leading to death within 4 weeks of age. The scurfy mutation causes loss of function of the foxp3 gene (foxp3(sf)), which is essential for development and maintenance of naturally occurring regulatory CD4 T cells (nTregs). In humans, mutations of the foxp3 gene cause immune dysregulation, polyendocrinopathy, enteropathy, and X-linked syndrome (IPEX). In most patients with IPEX and also in scurfy mice, T cells show hyperreactivity and levels of Th1- and Th2-associated cytokines are substantially elevated. We report that removal of CD28 expression rescued scurfy mice from early death. Longer-term surviving CD28-deficient scurfy mice still had lymphoproliferative disorder, but their CD4 T cells showed decreased interferon-gamma and no sign of interleukin-4 or interleukin-10 hyperproduction. Furthermore, injection of CTLA4-Ig to block CD28-B7 interactions substantially improved the survival of scurfy mice by blocking effector T-cell differentiation. These data support the hypothesis that CD28-B7 interactions play a critical role in the etiology of lethal autoimmune disease in scurfy mice by stimulating the differentiation of antigen-activated naive T cells into effector T cells.