CD28 and CTLA-4 (CD152) play essential roles in regulating T cell immunity, balancing the activation and inhibition of T cell responses, respectively. Although both receptors share the same ligands, CD80 and CD86, the specific requirement for two distinct ligands remains obscure. In the present study, we demonstrate that, although CTLA-4 targets both CD80 and CD86 for destruction via transendocytosis, this process results in separate fates for CTLA-4 itself. In the presence of CD80, CTLA-4 remained ligand bound, and was ubiquitylated and trafficked via late endosomes and lysosomes. In contrast, in the presence of CD86, CTLA-4 detached in a pH-dependent manner and recycled back to the cell surface to permit further transendocytosis. Furthermore, we identified clinically relevant mutations that cause autoimmune disease, which selectively disrupted CD86 transendocytosis, by affecting either CTLA-4 recycling or CD86 binding. These observations provide a rationale for two distinct ligands and show that defects in CTLA-4-mediated transendocytosis of CD86 are associated with autoimmunity.