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CD26 has proved interesting in the fields of immunology, endocrinology, cancer biology and nutrition owing to its ubiquitous and unusual enzyme activity. This dipeptidyl aminopeptidase (DPP IV) activity generally inactivates but sometimes alters or enhances the biological activities of its peptide substrates, which include several chemokines. CD26 costimulates both the CD3 and the CD2 dependent T-cell activation and tyrosine phosphorylation of TCR/CD3 signal transduction pathway proteins. CD26 in vivo has integral membrane protein and soluble forms. Soluble CD26 is at significant levels in serum, these levels alter in many diseases and soluble CD26 can modulate in vitro T-cell proliferation. CD26, being an adenosine deaminase binding protein (ADAbp), functions as a receptor for ADA on lymphocytes. The focus of this review is the structure and function of CD26 and the influence of its ligand binding activity on T-cell proliferation and the T cell costimulatory activity of CD26.