The cooperative activity of protein tyrosine kinases and phosphatases plays a central role in regulation of T cell receptor (TCR) signal strength. Perturbing this balance, and thus the threshold for TCR signals, has profound impacts on T cell development and function. We previously generated mice containing a point mutation in the juxtamembrane wedge of the receptor-like protein tyrosine phosphatase CD45. Demonstrating the critical negative regulatory function of the wedge, the CD45 E613R (WEDGE) mutation led to a lymphoproliferative disorder (LPD) and a lupus-like autoimmune syndrome. Using genetic, cellular, and biochemical approaches, we now demonstrate that the CD45 wedge influences T cell development and function. Consistent with increased TCR signal strength, WEDGE mice have augmented positive selection and enhanced sensitivity to the CD4-mediated disease experimental autoimmune encephalitis (EAE). These correspond with hyperresponsive calcium and pERK responses to TCR stimulation in thymocytes, but surprisingly, not in peripheral T cells, where these responses are actually depressed. Together, the data support a role for the CD45 wedge in regulation of T cell responses in vivo and suggest that its effects depend on cellular context.