The newly discovered mammalian CATERPILLER (NOD, NALP, PAN) family of proteins share similarities with the NBD-LRR superfamily of plant disease resistance (R) proteins and are predicted to mediate important immune regulatory function. This report describes the first cloning and characterization of a novel CATERPILLER gene, CLR16.2 that is located on human chromosome 16. The protein encoded by this gene has a typical NBD-LRR configuration. Analysis of CLR16.2 suggests the highest expression among T lymphocytes. Cellular localization studies of CLR16.2 revealed that it is a cytoplasmic protein. Querying microarray studies in the public data base showed that CLR16.2 was significantly (>90%) down-regulated 6 h after anti-CD3 and anti-CD28 stimulation of primary T lymphocytes. Its reduction upon T cell stimulation is consistent with a potential negative regulatory role. Indeed CLR16.2 decreased NF-kappaB, NFAT, and AP-1 induction of reporter gene constructs in response to T cell activation by anti-CD3 and anti-CD28 antibodies or PMA and ionomycin. Following T cell stimulation, the presence of CLR16.2 reduced the levels of the endogenous transcripts for the IL-2 and CD25 proteins that are central in maintaining T cell activation and preventing T cell anergy. This reduction was accompanied by a delay of IkappaBalpha degradation. We propose that CLR16.2 serves to attenuate T cell activation via TCR and co-stimulatory molecules, and its reduction during T cell stimulation allows the ensuing cellular activation.