The cytokine-inducible SH2 protein-3 (CIS3/SOCS-3/SSI-3) has been shown to inhibit the JAK/STAT pathway and act as a negative regulator of fetal liver erythropoiesis. Here, we studied the molecular mechanisms by which CIS3 regulates the erythropoietin (EPO) receptor (EPOR) signaling in erythroid progenitors and Ba/F3 cells expressing the EPOR (BF-ER). CIS3 binds directly to the EPOR as well as JAK2 and inhibits EPO-dependent proliferation and STAT5 activation. We have identified the region containing Tyr(401) in the cytoplasmic domain of the EPOR as a direct binding site for CIS3. Deletion of the Tyr(401) region of the EPOR reduced the inhibitory effect of CIS3, suggesting that binding of CIS3 to the EPOR augmented the negative effect of CIS3. Both N- and C-terminal regions adjacent to the SH2 domain of CIS3 were necessary for binding to EPOR and JAK2. In the N-terminal region of CIS3, the amino acid Gly(45) was critical for binding to the EPOR but not to JAK2, while Leu(22) was critical for binding to JAK2. The mutation of G45A partially reduced ability of CIS3 to inhibit EPO-dependent proliferation and STAT5 activation, while L22D mutant CIS3 was completely unable to suppress EPOR signaling. Moreover, overexpression of STAT5, which also binds to Tyr(401), reduced the binding of CIS3 to the EPOR, and the inhibitory effect of CIS3 against EPO signaling, while it did not affect JAB/SOCS-1/SSI-1. These data demonstrate that binding of CIS3 to the EPOR augments the inhibitory effect of CIS3. CIS3 binding to both EPOR and JAK2 may explain a specific regulatory role of CIS3 in erythropoiesis.