Platelet endothelial cell adhesion molecule-1 (PECAM-1/CD31) is a newly assigned member of the Ig immunoreceptor tyrosine-based inhibitory motif superfamily, and its functional role is suggested to be an inhibitory receptor that modulates immunoreceptor tyrosine-based activation motif-dependent signaling cascades. To test whether PECAM-1 is capable of delivering inhibitory signals in B cells and the functional requirement of protein-tyrosine phosphatases (PTPs) for this inhibitory signaling, we generated chimeric Fc gamma RIIB1-PECAM-1 receptors containing the extracellular and transmembrane portions of murine Fc gamma RIIB1 and the cytoplasmic domain of human PECAM-1. These chimeric receptors were stably expressed in chicken DT40 B cells either as wild-type or mutant cells deficient in SHP-1(-/-), SHP-2(-/-), SHIP(-/-), or SHP-1/2(-/-) and then assessed for their ability to inhibit B cell Ag receptor (BCR) signaling. Coligation of wild-type Fc gamma RIIB1-PECAM-1 with BCR resulted in inhibition of intracellular calcium release, suggesting that the cytoplasmic domain of PECAM-1 is capable of delivering an inhibitory signal that blocks BCR-mediated activation. This PECAM-1-mediated inhibitory signaling correlated with tyrosine phosphorylation of the Fc gamma RIIB1-PECAM-1 chimera, recruitment of SHP-1 and SHP-2 PTPs by the phosphorylated chimera, and attenuation of calcium mobilization responses. Mutational analysis of the two tyrosine residues, 663 and 686, constituting the immunoreceptor tyrosine-based inhibitory motifs in PECAM-1 revealed that both tyrosine residues play a crucial role in the inhibitory signal. Functional analysis of various PTP-deficient DT40 B cell lines stably expressing wild-type chimeric Fc gamma RIIB1-PECAM-1 receptor indicated that cytoplasmic Src homology 2-domain-containing phosphatases, SHP-1 and SHP-2, were both necessary and sufficient to deliver inhibitory negative regulation upon coligation of BCR complex with inhibitory receptor.