Regulation of tyrosine phosphorylation is a critical control point for integration of environmental signals into cellular responses. This regulation is mediated by the reciprocal actions of protein tyrosine kinases and phosphatases. CD45, the first and prototypic receptor-like protein tyrosine phosphatase, is expressed on all nucleated hematopoietic cells and plays a central role in this process. Studies of CD45 mutant cell lines, CD45-deficient mice, and CD45-deficient humans initially demonstrated the essential role of CD45 in antigen receptor signal transduction and lymphocyte development. It is now known that CD45 also modulates signals emanating from integrin and cytokine receptors. Recent work has focused on regulation of CD45 expression and alternative splicing, isoform-specific differences in signal transduction, and regulation of phosphatase activity. From these studies, a model is emerging in which CD45 affects cellular responses by controlling the relative threshold of sensitivity to external stimuli. Perturbation of this function may contribute to autoimmunity, immunodeficiency, and malignancy. Moreover, recent advances suggest that modulation of CD45 function can have therapeutic benefit in many disease states.