The invention provides isolated nucleic acids molecules, designated PD-L2 nucleic acid molecules, which encode novel B7-related molecules which are ligands for PD-1. The invention also provides antisense nucleic acid molecules, recombinant expression vectors containing PD-L2 nucleic acid molecules, host cells into which the expression vectors have been introduced, and nonhuman transgenic animals in which a PD-L2 gene has been introduced or disrupted. The invention further provides isolated PD-L2 polypeptides, fusion proteins, antigenic peptides and anti-PD-L2 antibodies. The invention still further provides methods for promoting or inhibiting the interaction between PD-L2 and PD-1. The invention further provides methods of identifying compounds that upmodulate T cell activation in the presence of a PD-1-mediated signal. Diagnostic and treatment methods utilizing compositions of the invention are also provided.