Beside the interaction of the antigen-presenting major histocompatibility complex with the T-cell receptor, a co-stimulatory signal is required for T-cell activation in an immune response. To reduce immune-mediated graft rejection in corneal transplantation, where topical application of drugs in ointments or eye-drops may be possible, we selected single-chain antibody fragments (scFv) with binding affinity to rat CD86 (B7.2) that inhibit the co-stimulatory signal. We produced the IgV-like domain of rat CD86 as a fusion protein in Escherichia coli by refolding from inclusion bodies. This protein was used as a target for phage display selection of scFv from HuCAL-1®, a fully artificial human antibody library. Selected binding molecules were shown to specifically bind to rat CD86 and inhibit the interaction of CD86 with CD28 and CTLA4 (CD152) in flow cytometry experiments. In an assay for CD86-dependent co-stimulation, the selected scFv fragment successfully inhibited the proliferation of T-cells induced by CD86-expressing P815 cells.