The mast cell function-associated Ag (MAFA) is a type II membrane glycoprotein originally found on the plasma membrane of rat mucosal-type mast cells (RBL-2H3 line). A C-type lectin domain and an immunoreceptor tyrosine-based inhibitory motif (ITIM) are located in the extracellular and intracellular domains of MAFA, respectively. MAFA clustering has previously been shown to suppress the secretory response of these cells to the FcepsilonRI stimulus. Here we show that the tyrosine of the ITIM undergoes phosphorylation, on MAFA clustering, that is markedly enhanced on pervanadate treatment of the cells. Furthermore, the Src homology 3 domain of the protein tyrosine kinase Lyn binds directly to a peptide containing nonphosphorylated MAFA ITIM and PAAP motif. Results of both in vitro and in vivo experiments suggest that Lyn is probably responsible for this ITIM phosphorylation, which increases the Src homology domain 2 (SH2) affinity of Lyn for the peptide. In vitro measurements established that tyrosine-phosphorylated MAFA ITIM peptides also bind the SH2 domains of inositol 5'-phosphatase (SHIP) as well as protein tyrosine phosphatase-2. However, the former single domain is bound 8-fold stronger than both of the latter. Further support for the role of SHIP in the action of MAFA stems from in vivo experiments in which tyrosine-phosphorylated MAFA was found to bind primarily SHIP. In RBL-2H3 cells overexpressing wild-type SHIP, MAFA clustering causes markedly stronger inhibition of the secretory response than in control cells expressing normal SHIP levels or cells overexpressing either wild-type protein tyrosine phosphatase-2 or its dominant negative form. In contrast, on overexpression of the SH2 domain of SHIP, the inhibitory action of MAFA is essentially abolished. Taken together, these results suggest that SHIP is the primary enzyme responsible for mediating the inhibition by MAFA of RBL-2H3 cell response to the FcepsilonRI stimulus.