The invention provides compositions and methods for inhibiting T-cell mediated rejection of a xenotransplanted organ by blocking the delivery of co-stimulatory signal 2 (the B7/CD28 interaction) in order to prevent the activation of xenoreactive T-cells in the recipient. In a first aspect, co-stimulation is prevented by administration to the organ recipient of a soluble form of CTLA-4 from the xenogeneic donor organism. This preferentially binds B7 on the xenograft and blocks the interaction between B7 on the xenogeneic donor cells and CD28 on recipient T-cells. In a second aspect, co-stimulation is antagonised by expressing a ligand for CTLA-4 on the xenogeneic donor cells. This ligand binds to CTLA-4 on activated T-cells of the recipient and antagonizes signal 2. In a third aspect, co-stimulation is prevented by expressing recipient organism MHC class II on the surface of the cells of the xenogeneic donor organ. The donor cells are thus able to present xenoantigens to a recipient T-cell in the context of self-MHC class II. If the donor cells do not express B7, or if B7 is blocked, the xenoreactive recipient T-cell becomes anergic.