SHIP-2, a recently identified inositol 5'-phosphatase, shares high level homology with SHIP-1. Although the role of SHIP-1 has been extensively studied, the role of SHIP-2 in myeloid cell functions is not known. Here, we have analyzed the expression patterns, molecular mechanism of activation, and function of SHIP-2 in human myeloid cell Fcgamma receptor (FcgammaR) signaling. We report that SHIP-2 is expressed in transformed myeloid cells and in primary macrophages, but not in peripheral blood monocytes. Treatment of peripheral blood monocytes with bacterial lipopolysaccharide induced expression of SHIP-2 in a dose-dependent manner. FcgammaRIIa clustering in THP-1 cells induced SHIP-2 tyrosine phosphorylation, suggesting a role for SHIP-2 in modulating FcgammaR-mediated function. Consistent with this notion, overexpression of wild-type SHIP-2 (but not catalytically deficient SHIP-2) in THP-1 cells almost completely abrogated NFkappaB-mediated gene transcription in response to FcgammaRIIa clustering. Furthermore, FcgammaRIIa-induced Akt activation was blocked by wild-type SHIP-2, but not by a catalytically deficient mutant of SHIP-2. Additional experiments analyzing the molecular mechanism of SHIP-2 induction by FcgammaRIIa revealed that SHIP-2 associated with the phosphorylated FcgammaRIIa immunoreceptor tyrosine-based activation motif via the SHIP-2 SH2 domain. Thus, an SH2 domain mutant of SHIP-2 failed to associate with FcgammaRIIa or to become tyrosine-phosphorylated upon FcgammaRIIa clustering. Finally, we also demonstrate that SHIP-2 phosphorylation was induced by FcgammaRI clustering in THP-1 cells. These findings unravel a novel level of regulation of FcgammaR-mediated activation of human myeloid cells by the expression and function of the inositol phosphatase SHIP-2.