We have used a high throughput small molecule screen, using a fission yeast-based assay, to identify novel phosphodiesterase 7 (PDE7) inhibitors. One of the most effective hit compounds was BC12, a barbituric acid-based molecule that exhibits unusually potent immunosuppressive and immunomodulatory actions on T lymphocyte function, including inhibition of T cell proliferation and IL-2 cytokine production. BC12 treatment confers a > 95% inhibition of IL-2 secretion in phytohaemagglutinin (PHA) plus phorbol-12-myristate-13-acetate (PMA) stimulated Jurkat T cells. The effect of BC12 on IL-2 secretion is not due to decreased cell viability; rather, BC12 blocks up-regulation of IL-2 transcription in activated T cells. BC12 also inhibits IL-2 secretion in human peripheral T lymphocytes stimulated in response to CD3/CD28 co-ligation or the combination of PMA and ionomycin, as well as the proliferation of primary murine T cells stimulated with PMA and ionomycin. A BC12 analog that lacks PDE7 inhibitory activity (BC12–4) displays similar biological activity, suggesting that BC12 does not act via PDE7 inhibition. To investigate the mechanism of inhibition of IL-2 production by BC12, we performed microarray analyses using unstimulated and stimulated Jurkat T cells in the presence or absence of BC12 or BC12–4. Our studies show these compounds affect the transcriptional response to stimulation and act via one or more shared targets to produce both anti-inflammatory and pro-stress effects. These results demonstrate potent immunomodulatory activity for BC12 and BC12–4 in T lymphocytes and suggest a potential clinical use as an immunotherapeutic to treat T lymphocyte-mediated diseases.