Cytolytic T lymphocyte-associated antigen 4 (CTLA-4) is a critical down-regulatory molecule in T cells that plays a major role in peripheral tolerance. Although the CD45 protein tyrosine phosphatase is a potent immunomodulatory target, the mechanisms by which antibody against CD45RB isoforms (anti-CD45RB) induces allograft tolerance remain unclear. We show here that anti-CD45RB treatment alters CD45 isoform expression on T cells, which is associated with rapid up-regulation of CTLA-4 expression. These effects appear specific and occur without up-regulation of other activation markers. Administration of a blocking monoclonal antibody to CTLA-4 at the time of transplantation prevents anti-CD45RB therapy from prolonging islet allograft survival. In addition, treatment with cyclosporin A blocks anti-CD45RB-induced CTLA-4 expression and promotes acute rejection. These data suggest that anti-CD45RB acts through mechanisms that include CTLA-4 up-regulation and demonstrate a link between CD45 and CTLA-4 that depends on calcineurin-mediated signaling. They demonstrate also that CTLA-4 expression may be specifically targeted to enhance allograft acceptance.