CTLA4Ig has been successfully used in the clinic for suppression of T cell activation. However, patients treated with CTLA4Ig experienced reduced incidence of tumors than predicted, but the underlying mechanism remains unknown. In this paper, we showed that brief administration of CTLA4Ig significantly reduced tumor metastasis and prolonged the survival of host mice bearing B16 melanoma. Depletion of NK cells prior to CTLA4Ig administration eliminated the CTLA4Ig-mediated anti-tumor activity. CTLA4Ig enhanced NK cell cytotoxicity to tumor cells via up-regulation of NK cell effecter molecules CD107a and perforin in vivo. In addition, we demonstrated that, upon activation, NK cells could significantly increase the expression of CD86 both in vitro and in vivo, and ligation of CD86 with CTLA4Ig significantly increased the ability of NK cells to kill tumor cells. Furthermore, a human NK cell line that expressed high level of CD86 was directly activated by CTLA4Ig so that killing of tumor targets was enhanced; this enhanced killing could be inhibited by blocking CD86. Our findings uncover a novel function of CTLA4Ig in tumor immunity and suggest that CD86 on NK cells is an activating receptor and closely involved in the CTLA4Ig-mediated anti-tumor response.