Summary: T-cell activation and the development of efficient immune responses requires the delivery, by the antigen-presenting cell, of two distinct signals. The first results from the engagement of the TCR:CD3:CD4 complex, and the second from the interaction of CD28 with the B7 family of co-stimulatory molecules. In this context, the physiological significance and the functional consequences of antigen presentation by B7-deficient parenchymal cells, which express MHC class II molecules as a result of inflammation, remains a matter of debate. In this paper we have attempted to critically review the often conflicting reports on the functional effects of antigen presentation by epithelial and endothelial cells to T cells, both in vitro and in vivo, Our own findings are summarised in a model which Is consistent with the suggestion of an important role for antigen presentation by parenchymal cells in the induction and the maintenance of peripheral tolerance.