Ly-49A is a member of the Ly-49 family of mouse natural killer cell receptors that inhibit cytotoxicity upon recognition of their ligands, the major histocompatibility complex (MHC) class I molecules, on the target cell surface. Although Ly-49A has an immunoreceptor tyrosine-based inhibition motif (ITIM) in its cytoplasmic tail, relatively little is known about the mechanisms underlying its inhibitory function. We report here that antibody-mediated co-ligation of the B-cell receptor (BCR) with the transfected Ly-49A molecule results in abrogation of BCR-induced interleukin-2 (IL-2) secretion and mild reduction in activation of Erk1/2 and p38 mitogen-activated protein (MAP) kinases in the B-cell line A20. Surprisingly, BCR-induced calcium mobilization was unaffected by cross-linking of BCR with Ly-49A. Furthermore, substitution of the single tyrosine residue in ITIM with phenylalanine, did not result in a complete loss of inhibitory function, as measured by BCR-induced IL-2 secretion. Deletion of the N-terminal 37 amino acid peptide, which includes the ITIM, did abrogate the inhibitory activity. Co-immunoprecipitation experiments revealed that, upon induction of tyrosine phosphorylation, Ly-49A recruits tyrosine phosphatase src-homology 2 (SH2) containing tyrosine phosphatases-1 (SHP-1), but not inositol phosphatase src-homology 2 (SH2) containing inositol phosphatase (SHIP), and that the tyrosine residue in the ITIM is critical for this interaction. These results suggest that transfected Ly-49A utilizes two different inhibitory mechanisms in B-cell signalling: ITIM-dependent and ITIM-independent.