Peripheral activation of antigen-specific T cells is stringently controlled to prevent immune responses against self-antigens. Only after a T cell is presented with two signals, an antigen and a co-stimulatory signal, can they be fully activated. In case antigen presentation occurs without co-stimulation, T-cell receptor (TCR) signaling pathways are regulated to prevent T-cell activation and induce T-cell tolerance. Thus, for a productive T-cell response to occur, co-stimulatory receptors need to serve the dual role of amplifying the TCR signaling while concomitantly releasing T cells from suppression. Biochemical and genetic studies during the last 10 years have documented the critical role of the E3 ubiquitin-ligase Cbl-b in this fundamental two-signal modulation of T-cell responses. In this review, we will discuss our current understanding on how Cbl-b controls T-cell activation and tolerance, its in vivo implications, as well as mechanisms for tuning T-cell-mediated immune responses by this essential E3 ligase.