Protein tyrosine phosphorylation and dephosphorylation are key regulatory events in T-cell receptor (TCR) signaling. We investigated the role of the tyrosine phosphatase SHPTP1 in TCR signaling by analysis of TCR signal transduction in motheaten (me/me) mice, which lack SHPTP1 expression. As revealed by flow cytometric analysis, thymocyte development was normal in me/me mice. However, me/me thymocytes hyperproliferated (3-to 5-fold) in response to TCR stimulation, whereas their response to interleukin 2 stimulation was unchanged compared with normal thymocytes. TCR-induced hyperproliferation of me/me thymocytes was reproduced in purified single-positive thymocytes. Moreover, me/me thymocytes produced increased amounts of interleukin 2 production upon TCR stimulation. Biochemical analysis revealed that, in response to TCR or TCR/CD4 stimulation, thymocytes lacking SHPTP1 showed increased tyrosyl phosphorylation of several cellular substrates, which correlated with increased activation of the src-family kinases Lck and Fyn. Taken together, our data suggest that SHPTP1 is an important negative regulator of TCR signaling, acting at least in part to inactivate Lck and Fyn.