Tumor-associated B7-H1 molecules inhibit antitumor immunity in some malignancies. We found that B7-H1 expression on patient myeloma cells and human myeloma cell lines (HMCLs) was upregulated by cultivating the cells with autologous stromal cells and the human stromal cell line HS-5. Among major cytokines produced by HS-5 cells, interleukin (IL)-6-induced B7-H1 expression on HMCLs. Moreover, HS-5 cell-mediated B7-H1 expression was downregulated by inhibiting IL-6. B7-H1(+) HMCLs were more proliferative and less susceptible to antimyeloma chemotherapy compared with B7-H1(-) HMCLs. Moreover, the former cells showed higher levels of Bcl-2 and FasL expression than the latter. Finally, B7-H1 molecules on HMCLs induced T-cell apoptosis and anergy of tumor-specific T cells. Consistent with these in vitro observations, patients whose myeloma cells expressed high levels of B7-H1 had higher myeloma cell percentages in the bone marrow (BM) and higher serum lactate dehydrogenase levels compared with other myeloma patients. In addition, B7-H1 expression levels were often upregulated after myeloma patients relapsed or became refractory to therapy. Our data indicate that the BM microenvironment upregulates B7-H1 expression on myeloma cells, which links to the two biological actions of inducing T-cell downregulation and enhancing aggressive myeloma-cell characteristics. Modulating the B7-H1 pathway may be worthwhile in myeloma.