CD4 recruitment to T cell receptor (TCR)-peptide-major histocompatibility class II complexes is required for stabilization of low affinity antigen recognition by T lymphocytes. The cytoplasmic portion of CD4 is thought to amplify TCR-initiated signal transduction via its association with the protein tyrosine kinase p56(lck). Here we describe a novel functional determinant in the cytosolic tail of CD4 that inhibits TCR-induced T cell activation. Deletion of two conserved hydrophobic amino acids from the CD4 carboxyl terminus resulted in a pronounced enhancement of CD4-mediated T cell costimulation. This effect was observed in the presence or absence of p56(lck), implying involvement of alternative cytosolic ligands of CD4. A two-hybrid screen with the intracellular portion of CD4 identified a previously unknown 33-kDa protein, ACP33 (acidic cluster protein 33), as a novel intracellular binding partner of CD4. Since interaction with ACP33 is abolished by deletion of the hydrophobic CD4 C-terminal amino acids mediating repression of T cell activation, we propose that ACP33 modulates the stimulatory activity of CD4. Furthermore, we demonstrate that interaction with CD4 is mediated by the noncatalytic alpha/beta hydrolase fold domain of ACP33. This suggests a previously unrecognized function for alpha/beta hydrolase fold domains as a peptide binding module mediating protein-protein interactions.