CD22 phosphorylation is an early event of B cell antigen receptor engagement and results in the recruitment of the negative regulatory tyrosine phosphatase, SHP-1. Peptides representing the potential phosphorylation sites within the cytoplasmic domain of CD22 have been used to stimulate SHP-1 catalytic activity and to inhibit the binding of SHP-1 to CD22 (Doody, G., Justement, L., Delibrias, C., Matthews, R., Lin, J., Thomas, M., and Fearon, D. (1995) Science 269, 242-244). However, the sites of phosphorylation within the cytoplasmic domain of CD22 and the importance of each for the recruitment and activation of SHP-1 remain unknown. Here we demonstrate that there are multiple sites within the cytoplasmic domain of CD22 that interact with the Src homology 2 domains of SHP-1. Nevertheless, a minimum of two tyrosines in CD22 is required for the association with SHP-1. Furthermore, both Src homology 2 domains of SHP-1 are necessary for efficient binding to CD22.