The transmembrane protein tyrosine phosphatase CD45 is expressed throughout B cell development and differentiation, with the exception of terminally differentiated plasma cells on which its expression is down regulated. Numerous studies using CD45-deficient B cell lines and CD45-deficient mice have clearly demonstrated that CD45 plays an important role in modulating the signal that is transduced via the B cell antigen receptor by regulating the phosphorylation state of Src family kinases. Spatial and temporal controls enable CD45 to promote B cell antigen receptor signal transduction by constitutively maintaining Src family kinases in a partially active state, such that the B cell is able to effectively respond to an antigenic challenge. Moreover, CD45 is required for optimal activation of Ca2+-dependent and MAP kinase-dependent signal transduction pathways in the B cell. The net result is that CD45 affects the B cell response by controlling the relative threshold of sensitivity to a given antigenic stimulus. Thus, CD45 expression and function is required for normal B cell development, tolerance induction, and responsiveness to antigen.