Objective Protein tyrosine phosphatase nonreceptor type 22 (PTPN22) is associated with an increased risk of systemic lupus erythematosus (SLE). PTPN22 encodes Lyp, and a disease-associated coding variant bears an R620W substitution (LypW). LypW carriage is associated with impaired production of type I interferon (IFN) by myeloid cells following Toll-like receptor (TLR) engagement. The aim of this study was to investigate the effects of LypW carriage on TLR signaling in patients with SLE. Methods Plasma IFNα concentrations and whole-blood IFN gene scores were compared in SLE patients who were LypW carriers and those who were noncarriers. TLR-7 agonist R848-stimulated IFNα and tumor necrosis factor levels, IFN-dependent gene expression, and STAT-1 activation were determined in peripheral blood mononuclear cells (PBMCs) and/or plasmacytoid dendritic cells (PDCs) obtained from these patients. The effect of LypW expression on the systemic type I IFN response to R848 stimulation in vivo was assessed in transgenic mice. Results Plasma IFNα levels and whole-blood IFN gene signatures were comparable in SLE patients who were LypW carriers and those who were noncarriers. However, PBMCs from LypW carriers produced less IFNα and showed reduced IFN-dependent gene up-regulation and STAT-1 activation after R848 stimulation. The frequency of PDCs producing IFNα2 and the per-cell IFNα2 levels were significantly reduced in LypW carriers. LypW-transgenic mice displayed reduced TLR-7-induced circulating type I IFN responses. Conclusion PDCs from SLE patients carrying the disease-associated PTPN22 variant LypW showed a reduced capacity for TLR-7 agonist-induced type I IFN production, even though LypW carriers displayed systemic type I IFN activation comparable with that observed in noncarriers. LypW carriage identifies SLE patients who may harbor defects in TLR- and PDC-dependent host defense or antiinflammatory functions.