In a screen to identify genes induced by NF-κB/Rel transcription factors, we cloned a novel gene, b7h, that is a close homolog of B7 costimulatory ligands expressed on antigen-presenting cells. B7h can costimulate proliferation of purified T cells through a receptor on T cells distinct from CD28 or CTLA-4. Surprisingly, although B7h is expressed in unstimulated B cells, its expression is induced in both 3T3 cells and embryonic fibroblasts treated with TNFα, and it is upregulated in nonlymphoid tissues of mice treated with LPS, a potent activator of TNFα. These data define a novel costimulatory ligand for T cells and suggest that induction of B7h by TNFα may function as a mechanism to directly augment recognition of self during inflammation.