Allogeneic bone marrow transplantation (BMT) under costimulation blockade allows induction of mixed chimerism and tolerance without global T-cell depletion (TCD). The mildest such protocols without recipient cytoreduction, however, require clinically impracticable bone marrow (BM) doses. The successful use of mobilized peripheral blood stem cells (PBSC) instead of BM in such regimens would provide a substantial advance, allowing transplantation of higher doses of hematopoietic donor cells. We thus transplanted fully allogeneic murine granulocyte colony-stimulating factor (G-CSF) mobilized PBSC under costimulation blockade (anti-CD40L and CTLA4Ig). Unexpectedly, PBSC did not engraft, even when very high cell doses together with nonmyeloablative total body irradiation (TBI) were used. We show that, paradoxically, T cells contained in the donor PBSC triggered rejection of the transplanted donor cells. Rejection of donor BM was also triggered by the cotransplantation of unmanipulated donor T cells isolated from naïve (nonmobilized) donors. Donor-specific transfusion and transient immunosuppression prevented PBSC-triggered rejection and mixed chimerism and tolerance were achieved, but graft-versus-host disease (GVHD) occurred. The combination of in vivo TCD with costimulation blockade prevented rejection and GVHD. Thus, if allogeneic PBSC are transplanted instead of BM, costimulation blockade alone does not induce chimerism and tolerance without unacceptable GVHD-toxicity, and the addition of TCD is required for success.