Current models of FcγR signal transduction in monocytes describe a molecular cascade that begins upon clustering of FcγR with the phosphorylation of critical tyrosine residues in the cytoplasmic domains of FcγRIIa or the γ-chain subunit of FcγRI and FcγRIIIa. The cascade engages several other tyrosine-phosphorylated molecules, either enzymes or adapters, to manifest ultimately an array of biological responses, including phagocytosis, cell killing, secretion of a variety of inflammatory mediators, and activation. Continuing to assess systematically the molecules participating in the cascade, we have found that the SH2-containing 5′-inositol phosphatase (SHIP) is phosphorylated on tyrosine early and transiently after FcγR clustering. This molecule in other systems, such as B cells and mast cells, mediates an inhibitory signal. We find that clustering of either FcγRIIa or FcγRI is effective in inducing SHIP phosphorylation, that SHIP binds in vitro to a phosphorylated immunoreceptor tyrosine-based activation motif, peptide from the cytoplasmic domain of FcγRIIa in activation-independent fashion, although SHIP binding increases upon cell activation, and that FcγRIIb and FcγRIIc are not responsible for the observed SHIP phosphorylation. These findings prompt us to propose that SHIP inhibits FcγR-mediated signal transduction by engaging immunoreceptor tyrosine-based activation motif-containing cytoplasmic domains of FcγRIIa and FcγRI-associated γ-chain.