Recent studies indicate that cyclic AMP (cAMP) induces cytotoxic T lymphocyte antigen (CTLA) 4. CTLA4 is expressed in T cells, and is a negative regulator of T cell activation. CTLA4 expression is regulated by T cell receptor plus CD28 (adaptive immune signaling) at both the transcriptional and post-transcriptional level. Here, we examine the pathways by which cAMP regulates CTLA4 expression, focusing on transcriptional activation. Elevating intracellular cAMP levels by cell-permeable cAMP analogs, the adenylyl cyclase activator, forskolin, or phosphodiesterase inhibitors increases CTLA4 mRNA expression in EL4 murine T cells and primary CD4(+) T cells. Activation of protein kinase A (using the protein kinase A-selective agonist, N6-phenyladenosine-cAMP), but not exchange proteins activated by cAMP (using the exchange proteins activated by cAMP-selective 8-pCPT-2Me-cAMP), increases CTLA4 promoter activity. Mutation constructs of the CTLA4 promoter uncover an enhancer binding site located within the -150 to -130 bp region relative to the transcription start site. Promoter analysis and chromatin immunoprecipitation assays suggest that cAMP response element-binding is a putative transcription factor induced by cAMP. We have previously shown that CTLA4 mediates decreased pulmonary inflammation in an LPS-induced murine model of acute lung injury (ALI). We observed that LPS can induce CTLA4 transcription via the same cAMP-inducible promoter region. The immunosuppressant, rapamycin, decreases cAMP and LPS-induced CTLA4 transcription in vitro. In vivo, LPS induces cAMP accumulation in bronchoalveolar lavage fluid, bronchoalveolar lavage cells, and lung tissues in ALI. We demonstrate that rapamycin decreases cAMP accumulation and CTLA4 expression in ALI. Together, these data suggest that cAMP may negatively regulate pulmonary inflammatory responses in vivo and in vitro by altering CTLA4 expression.