CD45-AP specifically associates with CD45, a protein tyrosine phosphatase essential for lymphocyte differentiation and antigen receptor-mediated signal transduction. CD45 is thought to mediate antigen receptor signaling by dephosphorylating regulatory tyrosine residues on Src family protein tyrosine kinases such as Lck. However, the mechanism for regulating CD45 protein tyrosine phosphatase activity remains unclear. CD45-AP-null mice were created to examine the role of CD45-AP in CD45-mediated signal transduction. T and B lymphocytes showed reduced proliferation in response to antigen receptor stimulation. Both mixed leukocyte reaction and cytotoxic T lymphocyte functions of T cells were also markedly decreased in CD45-AP-null mice. Interestingly, the interaction between CD45 and Lck was significantly reduced in CD45-AP-null T cells, indicating that CD45-AP directly or indirectly mediates the interaction of CD45 with Lck. Our data indicate that CD45-AP is required for normal antigen receptor signaling and function in lymphocytes.