Activated in immune responses, T lymphocytes differentiate into effector cells with potent immune function. CD28 is the most prominent costimulatory receptor for T‐cell activation. However, absence of CD28 costimulation did not completely impair effector function of CD4 or CD8 T cells. Moreover, increasing number of costimulatory molecules are recently found on antigen‐presenting cells to regulate T‐cell activation. To understand the molecular mechanisms that determine T‐cell function or tolerance, we have collectively examined the roles of positive and negative costimulatory molecules. Antigen‐specific naïve CD4 and CD8 T cells, only when activated in the absence of both CD28 and ICOS pathways, were completely impaired in effector function. These tolerant T cells not only were anergic with profound defects in TcR signal transduction but also completely lacked expression of effector‐specific transcription factors. T‐cell tolerance induction in this system requires the action by negative costimulatory molecules; T‐cell proliferation and function was partially restored by inhibiting PD‐1, B7‐H3 or B7S1. This work demonstrates that T‐cell function or tolerance is controlled by costimulatory signals.