CD22 is a membrane immunoglobulin (mlg)-associated protein of B cells. CD22 is tyrosine-phosphorylated when mlg is ligated. Tyrosine-phosphorylated CD22 binds and activates SHP, a protein tyrosine phosphatase known to negatively regulate signaling through mlg. Ligation of CD22 to prevent its coaggregation with mlg lowers the threshold at which mlg activates the B cell by a factor of 100. In secondary lymphoid organs, CD22 may be sequestered away from mlg through interactions with counterreceptors on T cells. Thus, CD22 is a molecular switch for SHP that may bias mlg signaling to anatomic sites rich in T cells.