The signalling thresholds of antigen receptors and co-stimulatory receptors determine immunity or tolerance to self molecules. Changes in co-stimulatory pathways can lead to enhanced activation of lymphocytes and autoimmunity, or the induction of clonal anergy. The molecular mechanisms that maintain immunotolerance in vivo and integrate co-stimulatory signals with antigen receptor signals in T and B lymphocytes are poorly understood. Members of the Cbl/Sli family of molecular adaptors function downstream from growth factor and antigen receptors. Here we show that gene-targeted mice lacking the adaptor Cbl-b develop spontaneous autoimmunity characterized by auto-antibody production, infiltration of activated T and B lymphocytes into multiple organs, and parenchymal damage. Resting cbl-b(-/-) lymphocytes hyperproliferate upon antigen receptor stimulation, and cbl-b(-/-) T cells display specific hyperproduction of the T-cell growth factor interleukin-2, but not interferon-gamma or tumour necrosis factor-alpha. Mutation of Cbl-b uncouples T-cell proliferation, interleukin-2 production and phosphorylation of the GDP/GTP exchange factor Vav1 from the requirement for CD28 co-stimulation. Cbl-b is thus a key regulator of activation thresholds in mature lymphocytes and immunological tolerance and autoimmunity.