Tyrosyl phosphorylation plays a key role in B lymphocyte signaling. The mechanisms by which protein tyrosine kinases (PTKs) regulate signaling pathways in B cells have been investigated extensively. More recently, attention has turned to the protein–tyrosine phosphatases (PTPs), particularly those containing SH2 domains. SHP-1 has been shown to be a critical regulator of antigen receptor signaling, acting, at least in part, via inhibitory co-receptors containing SHP-1 binding sites. These studies have been aided considerably by the analysis of mice carrying naturally-arising mutations in the SHP-1 gene as well as mice bearing targeted mutations in other components of B cell signaling pathways. The function of SHP-2 in B cells is less clear, although studies in other cell systems suggests that it may play a signal-enhancing role.