CTLA-4 is a crucial immune regulator that mediates both negative costimulation signals to T cells, and regulatory T (Treg)-cell extrinsic control of effector responses. Here we present evidence supporting a novel mechanism for this extrinsic suppression, executed by the alternatively spliced soluble CTLA-4 isoform (sCTLA-4). Analyses of human T cells in vitro show that sCTLA-4 secretion can be increased during responses, and has potent inhibitory properties, since isoform-specific blockade of its activity significantly increased Ag-driven proliferation and cytokine (IFN-γ, IL-17) secretion. Treg cells were demonstrated to be a prominent source of sCTLA-4, which contributed to suppression in vitro when their numbers were limiting. The soluble isoform was also produced by, and inhibited, murine T cells responding to Ag in vitro, and blockade of its activity in vivo protected against metastatic spread of melanoma in mice. We conclude that sCTLA-4 is an important immune regulator, responsible for at least some of the inhibitory effects previously ascribed to the membrane-bound isoform. These results suggest that the immune system exploits the different CTLA-4 isoforms for either intrinsic or extrinsic regulation of T-cell activity.