Cross-presentation of soluble Ag on MHC class I molecules to naive CD8 T cells by liver sinusoidal endothelial cells (LSECs) leads to induction of T cell tolerance that requires interaction between coinhibitory B7-H1 on LSECs and programmed cell death-1 on CD8 T cells. In this study, we investigate whether cross-presentation of high as well as low Ag concentrations allowed for LSEC-induced tolerance. Ag concentration directly correlated with the cross-presentation capacity of murine LSECs and thus strength of TCR stimulation. Although LSEC cross-presentation at low-Ag concentrations resulted in tolerance, they induced differentiation into effector T cells (CTL) at high-Ag concentrations. CTL differentiation under these conditions was not caused by increased expression of costimulatory CD80/86 on cross-presenting LSECs but was determined by early IL-2 release from naive CD8 T cells. B7-H1 signals from LSECs and TCR avidity reciprocally controlled early T cell release of IL-2 and CTL differentiation. B7-H1 expression directly correlated with cross-presentation at low- but not high-Ag concentrations, indicating an imbalance between TCR and coinhibitory signals regulating T cell release of IL-2. Exogenous IL-2 overrode coinhibitory B7-H1-mediated signals by LSECs and induced full CTL differentiation. Our results imply that LSEC-mediated T cell tolerance can be broken in situations where T cells bearing high-avidity TCR encounter LSECs cross-presenting high numbers of cognate MHC class I peptide molecules, such as during viral infection of the liver. Furthermore, we attribute a novel costimulatory function to IL-2 acting in a T cell autonomous fashion to promote local induction of immunity in the liver even in the absence of CD80/86 costimulation.