Persistent activation of T-lymphocytes requires two signals: one is initiated by T-cell receptor binding to antigenic peptide presented by MHC molecules. In addition, binding of the B7 family members CD80 or CD86 on professional antigen presenting cells to CD28 on T cells is considered to provide an important costimulatory signal. Activation without costimulation induces T-cell unresponsiveness or anergy. To selectively localize costimulatory activity to the surface of tumor cells and enhance activation of tumor-specific T cells, we have developed a novel molecular design for bispecific costimulatory proteins with antibody-like structure. Within a single polypeptide chain we have assembled the IgV-like, CD28-binding domain of human CD86 (CD86(111)) together with hinge, CH2 and CH3 domains of human IgG1, and the scFv(FRP5) antibody fragment which recognizes the ErbB2 (HER2) protooncogene present at high levels on the surface of many human tumor cells. Upon expression in the yeast Pichia pastoris, the resulting CD86(111)-IgG-scFv(FRP5) protein could be purified as a homodimeric, tetravalent molecule from culture supernatants using single-step affinity chromatography. Bispecific binding of the molecule to ErbB2 on the surface of tumor cells and to the B7 counter receptor CTLA-4 was demonstrated by FACS analysis. Potent costimulatory activity of chimeric CD86(111)-IgG-scFv(FRP5) was confirmed by its ability to stimulate the proliferation of primary human lymphocytes pre-activated by low concentrations of anti-CD3 antibody. Our results suggest that such multivalent soluble proteins which combine specific targeting to tumor cells with costimulatory activity may become useful tools to elicit and/or improve T-cell mediated, tumor-specific immune responses.