Immunoglobulin-like transcript (ILT) 3 is a novel cell surface molecule of the immunoglobulin superfamily, which is selectively expressed by myeloid antigen presenting cells (APCs) such as monocytes, macrophages, and dendritic cells. The cytoplasmic region of ILT3 contains putative immunoreceptor tyrosine-based inhibitory motifs that suggest an inhibitory function of ILT3. Indeed, co-ligation of ILT3 to stimulatory receptors expressed by APCs results in a dramatic blunting of the increased [Ca2+]i and tyrosine phosphorylation triggered by these receptors. Signal extinction involves SH2-containing protein tyrosine phosphatase 1, which is recruited by ILT3 upon cross-linking. ILT3 can also function in antigen capture and presentation. It is efficiently internalized upon cross-linking, and delivers its ligand to an intracellular compartment where it is processed and presented to T cells. Thus, ILT3 is a novel inhibitory receptor that can negatively regulate activation of APCs and can be used by APCs for antigen uptake.