Positive selection during thymocyte development is driven by the affinity and avidity of the TCR for MHC-peptide complexes expressed in the thymus. In this study, we show that programmed death-1 (PD-1), a member of the B7/CD28 family of costimulatory receptors, inhibits TCR-mediated positive selection through PD-1 ligand 1 (PD-L1):PD-1 interactions. Transgenic mice that constitutively overexpress PD-1 on CD4+CD8+ thymocytes display defects in positive selection in vivo. Using an in vitro model system, we find that PD-1 is up-regulated following TCR engagement on CD4+CD8+ murine thymocytes. Coligation of TCR and PD-1 on CD4+CD8+ thymocytes with a novel PD-1 agonistic mAb inhibits the activation of ERK and up-regulation of bcl-2, both of which are downstream mediators essential for positive selection. Inhibitory signals through PD-1 can overcome the ability of positive costimulators, such as CD2 and CD28, to facilitate positive selection. Finally, defects in positive selection that result from PD-1 overexpression in thymocytes resolve upon elimination of PD-L1, but not PD-1 ligand 2, expression. PD-L1-deficient mice have increased numbers of CD4+CD8+ and CD4+ thymocytes, indicating that PD-L1 is involved in normal thymic selection. These data demonstrate that PD-1:PD-L1 interactions are critical to positive selection and play a role in shaping the T cell repertoire.