Signaling lymphocytic activation molecule family 3 (SLAMF3/Ly9) is a coregulatory molecule implicated in T-cell activation and differentiation. Systemic lupus erythematosus (SLE) is characterized by aberrant T-cell activation and compromised IL-2 production, leading to abnormal regulatory T-cell (Treg) development/function. Here we show that SLAMF3 functions as a costimulator on CD4(+) T cells and influences IL-2 response and T helper cell differentiation. SLAMF3 ligation promotes T-cell responses to IL-2 via up-regulation of CD25 in a small mothers against decapentaplegic homolog 3 (Smad3)-dependent mechanism. This augments the activation of the IL-2/IL-2R/STAT5 pathway and enhances cell proliferation in response to exogenous IL-2. SLAMF3 costimulation promotes Treg differentiation from naïve CD4(+) T cells. Ligation of SLAMF3 receptors on SLE CD4(+) T cells restores IL-2 responses to levels comparable to those seen in healthy controls and promotes functional Treg generation. Taken together, our results suggest that SLAMF3 acts as potential therapeutic target in SLE patients by augmenting sensitivity to IL-2.