Pep and CD45 are tyrosine phosphatases whose targets include the Src-family kinases, critical mediators of Ag receptor signaling. A polymorphism in PTPN22, the gene that encodes the human Pep orthologue Lyp, confers susceptibility to multiple human autoimmune diseases in the context of complex genetic backgrounds. However, the functional significance of the R620W risk allele is not clear. We report that misexpression of wild-type or R620W Pep/Lyp in Jurkat cells, in the context of its binding partner Csk, unmasks the risk allele as a hypomorph. It has been shown previously that although Pep-deficient mice on the B6 background have hyperresponsive memory T cells, autoimmunity does not develop. Mice containing a point mutation in the CD45 juxtamembrane wedge domain (E613R) develop a B cell-driven, lupus-like disease on the mixed 129/B6 background, but not on the B6 background. We studied the ability of Pep deficiency to act as a genetic modifier of the CD45 E613R mutation on the nonautoimmune B6 background to understand how complex susceptibility loci might interact in autoimmunity. In this study we report that double mutant mice develop a lupus-like disease as well as lymphadenopathy, polyclonal lymphocyte activation, and accelerated memory T cell formation. Following Ag receptor stimulation, peripheral B cells in the double mutant mice phenocopy hyperresponsive CD45 E613R B cells, whereas peripheral T cells respond like Pep(-/-) T cells. These studies suggest that Pep(-/-) T cells in the context of a susceptible microenvironment can drive hyperresponsive CD45 E613R B cells to break tolerance.