The interaction of CD22 with alpha2,6-linked sialic acid ligands has been widely proposed to regulate B lymphocyte function and migration. Here, we generated gene-targeted mice that express mutant CD22 molecules that do not interact with these ligands. CD22 ligand binding regulated the expression of cell surface CD22, immunoglobulin M and major histocompatibility complex class II on mature B cells, maintenance of the marginal zone B cell population, optimal B cell antigen receptor-induced proliferation, and B cell turnover rates. However, CD22 negative regulation of calcium mobilization after B cell antigen receptor ligation, CD22 phosphorylation, recruitment of SHP-1 to CD22 and B cell migration did not require CD22 ligand engagement. These observations resolve longstanding questions regarding the physiological importance of CD22 ligand binding in the regulation of B cell function in vivo.