Costimulatory signals via B7/CD28 family molecules (signal 2) are critical for effective adaptive CD8+ T cell immune responses. In addition to costimulatory signals, B7/CD28 family coinhibitory receptor/ligands that modulate immune responses have been identified. In acute hepatitis C virus (HCV) infection, programmed death receptor 1, an inhibitory receptor in the CD28 family, is highly expressed on virus-specific CD8+ T cells, yet vigorous immune responses often develop. We hypothesized that other costimulatory signals present during the acute phase of HCV infection would be important to counter this negative signaling. In this study, we found that CD86 was highly expressed on HCV-specific CD8+ T cells early in acute HCV infection and was lost on transition to chronic HCV infection; the expression of CD86 was different from other activation markers, because expression was delayed after in vitro TCR stimulation and required sufficient IL-2 signaling; and HCV-specific CD8+ T cells in the liver of patients with chronic HCV infection were highly activated (CD69, CD38, and HLA-DR expression), but only a minority expressed CD86 or showed evidence of recent IL-2 signaling (low basal phosphorylated STAT5), despite persistent viremia. Our study identified B7 ligand expression on HCV-specific CD8+ T cells as a distinct marker of effective T cell stimulation with IL-2 signaling in acute HCV infection. Expression of costimulatory molecules, such as CD86, early in HCV infection may be essential in overcoming inhibitory signals from the high level of programmed death receptor 1 expression also seen at this phase of infection.