CD28 provides a costimulatory signal that results in optimal activation of T cells. The signal transduction pathways necessary for CD28-mediated costimulation are presently unknown. Engagement of CD28 leads to its tyrosine phosphorylation and subsequent binding to Src homology 2 (SH2)-containing proteins including the p85 subunit of phosphatidylinositol 3'-kinase (PI3K); however, the contribution of PI3K to CD28-dependent costimulation remains controversial. Here we show that CD28 is capable of binding the Src homology 3 (SH3) domains of several proteins, including Grb2. The interaction between Grb2 and CD28 is mediated by the binding of Grb2-SH3 domains to the C-terminal diproline motif present in the cytoplasmic domain of CD28. While the affinity of the C-terminal SH3 domain of Grb2 for CD28 is greater than that of the N-terminal SH3 domain, optimal binding requires both SH3 domains. Ligation of CD28, but not tyrosine-phosphorylation, is required for the SH3-mediated binding of Grb2 to CD28. We propose a model whereby the association of Grb2 with CD28 occurs via an inducible SH3-mediated interaction and leads to the recruitment of tyrosine-phosphorylated proteins such as p52(shc) bound to the SH2 domain of Grb2. The inducible interaction of Grb2 to the C-terminal region of CD28 may form the basis for PI3K-independent signaling through CD28.