B7-H1 is a novel B7 family protein attributed to costimulatory and immune regulatory functions. Here we report that human myoblasts cultured from control subjects and patients with inflammatory myopathies as well as TE671 muscle rhabdomyosarcoma cells express high levels of B7-H1 after stimulation with the inflammatory cytokine IFN-gamma. Coculture experiments of MHC class I/II-positive myoblasts with CD4 and CD8 T cells in the presence of antigen demonstrated the functional consequences of muscle-related B7-H1 expression: production of inflammatory cytokines, IFN-gamma and IL-2, by CD4 as well CD8 T cells was markedly enhanced in the presence of a neutralizing anti-B7-H1 antibody. This observation was paralleled by an augmented expression of the T cell activation markers CD25, ICOS, and CD69, thus showing B7-H1-mediated inhibition of T cell activation. Further, we investigated 23 muscle biopsy specimens from patients with polymyositis (PM), inclusion body myositis (IBM), dermatomyositis (DM), and nonmyopathic controls for B7-H1 expression by immunohistochemistry: B7-H1 was expressed in PM, IBM, and DM specimens but not in noninflammatory and nonmyopathic controls. Staining was predominantly localized to areas of strong inflammation and to muscle cells as well as mononuclear cells. These data highlight the immune regulatory properties of muscle cells and suggest that B7-H1 expression represents an inhibitory mechanism induced upon inflammatory stimuli and aimed at protecting muscle fibers from immune aggression.