NK and T cells are important for combating CMV infection. Some NK and T cells express leukocyte Ig-like receptor-1 (LIR-1), an inhibitory receptor recognizing MHC class I and the CMV-encoded homolog UL18. We previously demonstrated an early increase in LIR-1-expressing blood lymphocytes in lung-transplanted patients later developing CMV disease. We now show that NK and T cells account for the observed LIR-1 augmentation. Coincubation of PBMC from CMV-seropositive donors with virus-infected lung fibroblasts led to a T cell-dependent secretion of IFN-γ, produced mainly by LIR-1+ T cells and by NK cells. Cytokine production during coculture with fibroblasts infected with virus containing the UL18 gene was augmented compared with the UL18 deletion virus, suggesting a stimulatory role for UL18. However, purified UL18Fc proteins inhibited IFN-γ production of LIR-1+ T cells. We propose that cytokine production in the transplant induces NK and T cells to express LIR-1, which may predispose to CMV disease by MHC/LIR-1-mediated suppression. Although the UL18/LIR-1 interaction could inhibit T cell responses, this unlikely plays a role in response to infected cells. Instead, our data point to an activating role for viral UL18 during infection, where indirect intracellular effects cannot be excluded.