We have previously shown that natural killer (NK) cells secrete a distinct profile of immunomodulatory cytokines in response to dual stimulation with antibody-coated tumor cells and interleukin-12 (IL-12). This NK cell cytokine response is dependent on synergistic signals mediated by the activating receptor for the Fc portion of IgG (FcgammaRIIIa) and the IL-12 receptor (IL-12R), both constitutively expressed on NK cells. The phosphatase Src homology 2-containing inositol 5'-phosphatase 1 (SHIP1) is known to exert inhibitory effects on Fc receptor (FcR) signaling via its enzymatic activity on phosphatidylinositol 3-kinase (PI3-K) products within many cells of the immune system, most notably mast cells, B cells, and monocytes. However, its activity in the context of FcR activation on NK cells has not been fully explored. The current study focused on the regulation of FcgammaRIIIa-induced NK cell cytokine production by SHIP1. Inhibitor studies showed that NK cell IFN-gamma production following FcR stimulation in the presence of IL-12 depended, in part, on the downstream products of PI3-K. Overexpression of wild-type (WT) SHIP1, but not a catalytic-deficient mutant, via retroviral transfection of primary human NK cells, resulted in a >70% reduction of NK cell IFN-gamma production in response to costimulation. In addition, NK cells from SHIP1-/- mice produced 10-fold greater amounts of IFN-gamma following culture with antibody-coated tumor cells plus IL-12 compared with NK cells from WT mice. Further, activation of the mitogen-activated protein kinase (MAPK) family member extracellular signal-regulated kinase (Erk; a downstream target of PI3-K) was significantly enhanced within SHIP1-/- NK cells compared with WT NK cells following costimulation. Pharmacologic inhibition of Erk activity, but not Jnk MAPK activity, led to significantly decreased IFN-gamma production from both SHIP1-/- and WT NK cells under these conditions. These results are the first to show a physiologic role for SHIP1 in the regulation of NK cell cytokine production and implicate PI3-K in the induction of MAPK signal transduction following costimulation of NK cells via the FcR and the IL-12R.