The E3 ubiquitin ligase Casitas B-lineage lymphoma (Cbl-b) is central to antigen-induced immune tolerance and regulates the CD28 dependence of T cell activation. Cbl-b undergoes ubiquitination and proteasomal degradation after adequate costimulation of T cells; however, the mechanism involved is unknown. Here, we identified protein kinase C-theta (PKC-theta) as the critical intermediary for the inactivation of Cbl-b in response to costimulation of T cells through CD28. PKC-theta associated with Cbl-b on stimulation of the T cell receptor. After costimulation of T cells through CD28, Cbl-b was ubiquitinated and degraded through a mechanism that depended on the kinase activity of PKC-theta. Consistent with this mechanism, the impaired responses of PKCtheta-deficient T cells were at least partially restored by the concomitant genetic loss of cblb. Thus, our data establish a nonredundant antagonism between PKC-theta and Cbl-b that regulates T cell activation responses.