Human gastric mucosal epithelial cells display class II MHC, the expression of which is increased during Helicobacter pylori infection. These observations suggest that the gastric epithelium may participate as antigen-presenting cells (APC) during local immune responses. The increase in class II MHC expression occurs in parallel with an elevation in gastric CD4+ T cell numbers within and adjacent to the epithelium. Since the expression of either B7-1 (CD80) or B7-2 (CD86) on APC is required for the activation of T cells, it was important to establish human gastric epithelial cells expressed those surface ligands. The expression of B7-1 and B7-2 was detected on human gastric epithelial cell lines and freshly isolated epithelial cells from gastric biopsies with specific antibodies. B7-2 expression was higher than B7-1 at both protein and transcript levels and was increased after crosslinking class II MHC molecules on IFNgamma-treated epithelial cells and in cells pretreated with the combination of IFNgamma and H. pylori. Similarly, B7-2 expression was higher on gastric epithelial cells from H. pylori-infected tissues compared with those from uninfected specimens. To determine the function of these molecules on gastric epithelial cells, antibodies to B7-1 and B7-2 were shown to reduce the ability of the cells to stimulate alloreactive CD4+ T cells. These observations are the first to demonstrate that B7-1 and B7-2 are expressed on mucosal epithelial cells in situ. Thus, the expression of B7-1 and B7-2 by epithelial cells may allow them to act as APC in regulating local responses such as those that occur during infection with H. pylori.