T cells are central to graft rejection, and therefore preventing T cells from recognizing and destroying allografts remains an important area of transplant research. However, T cells are also required for transplant tolerance; a subset can enforce a state of tolerance by functioning as regulatory cells. As both rejection and regulation directed against alloantigens require T-cell activation, costimulatory molecules undoubtedly play an important role in regulating both processes and ultimately the fate of the allograft. However, costimulation involves an incredibly complex array of interactions that may act contemporaneously or at different times; these interactions can have additive or opposing effects on T-cell activation or differentiation. While some costimulatory molecules mediate activation of naive T cells or generation of memory T cells, others inhibit T-cell activation and promote anergy or apoptosis. Moreover, a given pathway can have diametrically different effects on T-effector cells and regulatory T cells (Tregs). Such a complexity presents both challenges and opportunities in targeting T-cell costimulatory pathways to promote transplant tolerance. In this review article, we provide a summary of recent advances in our understanding of T-cell costimulatory pathways in regulating different phases of the T-cell response in transplant models. We focus specifically on costimulatory molecules in the immunoglobulin (Ig) superfamily, tumor necrosis factor (TNF)/TNF receptor superfamily, and in the emerging T-cell Ig domain and mucin domain family (TIM), highlighting their unique and redundant roles in regulating the T-effector and Treg responses after transplantation. Finally, we summarize emerging approaches toward inducing tolerance by tipping the balance between cytopathic T-effector cells and protective Tregs by selectively targeting specific T-cell costimulatory pathways that are critically involved.