PTPN3 (PTPH1) is a cytoskeletal protein tyrosine phosphatase that has been implicated as a negative regulator of early TCR signal transduction and T cell activation. To determine whether PTPN3 functions as a physiological negative regulator of TCR signaling in primary T cells, we generated gene-trapped and gene-targeted mouse strains that lack expression of catalytically active PTPN3. PTPN3 phosphatase-negative mice were born in expected Mendelian ratios and exhibited normal growth and development. Furthermore, numbers and ratios of T cells in primary and secondary lymphoid organs were unaffected by the PTPN3 mutations and there were no signs of spontaneous T cell activation in the mutant mice with increasing age. TCR-induced signal transduction, cytokine production, and proliferation was normal in PTPN3 phosphatase-negative mice. This was observed using both quiescent T cells and recently stimulated T cells where expression of PTPN3 is substantially up-regulated. We conclude, therefore, that the phosphatase activity of PTPN3 is dispensable for negative regulation of TCR signal transduction and T cell activation.