NK- and T-cells express at their surface, members of a multigenic family of killer-cell inhibitory receptors (KIR) for MHC Class I molecules. KIR engagement leads to the inhibition of NK- and T-cell activation programs. These receptors recruit the protein tyrosine phosphatases (PTPase), SHP-1 and SHP-2, upon tyrosine phosphorylation of immunoreceptor tyrosine-based inhibition motif (ITIM) expressed in both human and mouse KIR. We further define the ITIM amino acids sequence required in that recognition and demonstrate the critical role of the phosphoY-2 amino acid residue in this V/IxYxxL/V motif. In addition, using RBL-2H3 cells expressing endogenous Fc epsilonRI receptors as well as transfected CD25/CD3zeta chimera and p58.183 human KIR, we show that KIR inhibitory function requires co-engagement of KIR and ITAM-containing receptors. These results document the pathway used by KIR to down-regulate NK- and T-cell activation programs.