In this report, we demonstrate that the Src homology 2 domain-containing inositol-5-phosphatase (SHIP) plays a critical role in regulating both B cell development and responsiveness to antigen stimulation. SHIP(-/-) mice exhibit a transplantable alteration in B lymphoid development that results in reduced numbers of precursor B (fraction C) and immature B cells in the bone marrow. In vitro, purified SHIP(-/)- B cells exhibit enhanced proliferation in response to B cell receptor stimulation in both the presence and absence of Fcgamma receptor IIB coligation. This enhancement is associated with increased phosphorylation of both mitogen-activated protein kinase and Akt, as well as with increased survival and cell cycling. SHIP(-/)- mice manifest elevated serum immunoglobulin (Ig) levels and an exaggerated IgG response to the T cell-independent type 2 antigen trinitrophenyl Ficoll. However, only altered B cell development was apparent upon transplantation into nonobese diabetic-severe combined immunodeficient (NOD/SCID) mice. The in vitro hyperresponsiveness, together with the in vivo findings, suggests that SHIP regulates B lymphoid development and antigen responsiveness by both intrinsic and extrinsic mechanisms.