The strength of interaction between the antigenic peptide-loaded MHC (MHC/p) and the TCR determines T-cell fate in the thymus. A high avidity interaction between the TCR and the MHC/p induces apoptosis of self-reactive T cells (negative selection), whereas a moderate avidity interaction rescues thymocytes from apoptosis and permits further differentiation to mature T cells (positive selection). Leukocyte common antigen-related molecule (LAR), a receptor-like protein tyrosine phosphatase, is expressed on immature thymocytes, but its role in thymocyte differentiation has not yet been fully elucidated. We analyzed LAR-deficient mice and demonstrated that LAR deficiency affected the differentiation and expansion of immature thymocytes as well as positive and negative selection. Furthermore, LAR deficiency resulted in a lower Ca2+ response. The results indicate that LAR is an important modulator of TCR signaling that controls thymocyte differentiation.