Co-stimulation is an integral part of T cell signaling involved in almost all facets of T cell biology. While much is known about co-stimulation in differentiation and function of conventional αβ T cells, less is known about how co-stimulation affects the development and programming of γδ T cells. In this study, we have investigated the role of inducible T cell co-stimulator (ICOS) on the development of γδ T cells. We show that ICOS is expressed by a population of immature Vγ2⁺CD45RB^low γδ T cells predisposed to interleukin-17 (IL-17) production. We found that treatment with ICOS specific antibodies drastically reduces fetal development of IL-17-producing γδ T cells by agonistic actions, and that ICOS deficient mice have a significant increase in the population of IL-17-producing Vγ2⁺ γδ T cells in the thymus, spleen, lymph nodes and skin and exhibit exacerbated sensitization responses to 2,4-dinitrofluorobenzene. In conclusion, this study demonstrates that development of IL-17-producing Vγ2⁺ γδ T cells is reduced by ICOS signaling in the thymus.