Coligation of the Fc receptor on B cells, FcγRIIB1, with the B cell antigen receptor (BCR) leads to abortive BCR signaling. Here it was shown that the FcγRIIB1 recruits the phosphotyrosine phosphatase PTP1C after BCR coligation. This association is mediated by the binding of a 13-amino acid tyrosine-phosphorylated sequence to the carboxyl-terminal Src homology 2 domain of PTP1C and activates PTP1C. Inhibitory signaling and PTP1C recruitment are dependent on the presence of the tyrosine within the 13-amino acid sequence. Inhibitory signaling mediated by FcγRIIB1 is deficient in motheaten mice which do not express functional PTP1C. Thus, PTP1C is an effector of BCR-FcγRIIB1 negative signal cooperativity.