The lymphocyte activation gene-3 (LAG-3, CD223) is a CD4-related, activation-induced cell surface molecule that binds to MHC class II with high affinity. The function of murine LAG-3 on T cells is unclear. Here, we show that V beta 7/8(+)LAG-3(-/-) T cells expand poorly following staphylococcal enterotoxin B (SEB) stimulation in vitro. LAG-3(-/-) T cells proliferate at a normal rate, but exhibit increased cell death. Similar observations were made with LAG-3(-/-)CD4(+)OT-II TCR transgenic T cells following peptide stimulation. Despite reduced T cell expansion and increased cell death, LAG-3(-/-)OT-II(+) T cells secrete more IL-2 and IFN-gamma following stimulation. Antigen-driven expansion of LAG-3(-/-) T cells was restored by constitutive expression of LAG-3 via retroviral-mediated stem cell gene transfer. We further show that LAG-3 function is mediated via its cytoplasmic domain, for which a conserved 'KIEELE' motif is essential. Our data support a role for LAG-3 in regulating the expansion of activated T cells.