CD160, a glycosylphosphatidylinositol-anchored member of the immunoglobulin superfamily, is expressed on both cytolytic lymphocytes and some unstimulated CD4+ T cells. Here we show that CD160 expression was increased after activation of human CD4+ T cells and that crosslinking CD160 with monoclonal antibody strongly inhibited CD3- and CD28-mediated activation. We found that herpesvirus entry mediator (HVEM) was a ligand of CD160 that acted as a 'bidirectional switch' for T cell activation, producing a positive or negative outcome depending on the engagement of HVEM by CD160 and known HVEM ligands such as B and T lymphocyte attenuator (BTLA) and the T lymphocyte receptor LIGHT. Inhibition of CD4+ T cell activation by HVEM-transfected cells was dependent on CD160 and BTLA; when the cysteine-rich domain 1 of HVEM was deleted, this inhibition was lost, resulting in strong T cell activation. CD160 thus serves as a negative regulator of CD4+ T cell activation through its interaction with HVEM.