Coaggregation of Fc gamma RIIB1 with B cell Ag receptors (ECR) leads to inhibition of,BCR-mediated signaling via recruitment of Src homology domain 2 (SH2)-containing phosphatases. In vitro peptide binding experiments using phosphotyrosine-containing sequences derived from the immunoreceptor tyrosine-based inhibitory motif(ITIM) known to mediate Fc gamma RIIB1 effects suggest that the receptor uses SH2-containing inositol phophatase (SHIP) and SH2-containing phophotyrosine phosphatase (SHP)-1, as well as SHP-2 as effecters. In contrast, coimmunoprecipitation studies of receptor-effector associations suggest that the predominant Fc gamma RIIB1 effector protein is SHIP. However, biologically significant interactions may be lost in such studies if reactants' dissociation rates (K-d) are high. Thus, it is unclear to what extent these assays reflect the relative recruitment of SHIP, SHP-1, and SHP-2 to the receptor in vivo. As an alternative approach to this question, we have studied the effects of ectopically expressed SHIP, SHP-1, or SHP-2 SH2-containing decoy proteins on Fc gamma RIIB1 signaling. Results demonstrate the SHIP is the predominant intracellular ligand for the phosphorylated Fc gamma RIIB1 ITIM, although the SHP-2 decoy exhibits some ability to bind Fc gamma RIIB1 and block Fc receptor function. The SHIP SH2, while not affecting Fc gamma RIIB1 tyrosyl phosphorylation, blocks receptor-mediated recruitment of SHIP, SHIP phosphorylation, recruitment of p52 Shc, phosphatidylinositol 3,4,5-trisphosphate hydrolysis, inhibition of mitogen-activated protein kinase activation, and, albeit more modestly, Fc gamma RIIB1 inhibition of Ca2+ mobilization. Taken together, results implicate ITIM interactions with SHIP as a major mechanism of Fc gamma RIIB1-mediated inhibitory signaling.