Compositions and methods for costimulating T cells (i.e., increasing antigen-specific proliferation of T cells, enhancing cytokine production by T cells, stimulating differentiation ad effector functions of T cells and/or promoting T cell survival) are provided. Suitable compositions include variant B7-DC polypeptides, fragments and fusion proteins thereof. Variant B7-DC polypeptides have reduced binding affinity for the inhibitory PD-1 ligand and substantially retain the ability to costimulate T cells. Methods for using variant B7-DC polypeptides to stimulate immune responses in subjects in need thereof are provided.