Abstract Although several groups have investigated the role of SHIP in macrophage (Mϕ) development and function, SHIP’s contribution to the generation, maturation, and innate immune activation of dendritic cells (DCs) is poorly understood. We show herein that SHIP negatively regulates the generation of DCs from bone marrow precursors in vitro and in vivo, as illustrated by the enhanced expansion of DCs from SHIP−/− GM-CSF cultures, as well as increased numbers of DCs in the spleens of SHIP-deficient mice. Interestingly, however, these SHIP−/− DCs display a relatively immature phenotype and secrete substantially lower levels of IL-12 after TLR ligand stimulation than wild type DCs. This, in turn, leads to a dramatically reduced stimulation of Ag-specific T cell proliferation and Th1 cell responses in vitro and in vivo. This immature phenotype of SHIP−/− DCs could be reversed with the PI3K inhibitors LY294002 and wortmannin, suggesting that SHIP promotes DC maturation by reducing the levels of the PI3K second messenger phosphatidylinositol-3,4,5-trisphosphate. These results are consistent with SHIP being a negative regulator of GM-CSF–derived DC generation but a positive regulator of GM-CSF–derived DC maturation and function.