Experimental autoimmune encephalomyelitis (EAE) is the most extensively studied animal model of the human disease multiple sclerosis (MS). In EAE, CNS demyelination is induced by immunization with myelin proteins or adoptive transfer of myelin-reactive CD4+ T cells. Since the antigen specificity of the immune response believed to be responsible for the pathology of MS is not well defined, therapies that target aspects of T cell activation that are not antigen specific may be more applicable to the treatment of MS. As a result, understanding the role of costimulatory molecules in the activation of naïve and memory T cells has become an area of extensive investigation. Naïve T cells require two signals for activation. Signal one is provided by engagement of the T cell receptor (TCR) with MHC/peptide complexes and provides antigen specificity to the immune response. The second signal, termed costimulation, is usually provided by B7 molecules on APC to CD28 molecules expressed on T cells and is antigen-independent. This review will discuss our current understanding of costimulation in the induction and perpetuation of EAE, as well as the potential of costimulation blockade in the treatment of MS.