The paired Ig-like type 2 receptor (PILR), which comprises both inhibitory and activating isoforms, is well conserved among most mammalians. The inhibitory PILRalpha possesses an ITIM in its cytoplasmic domain, whereas the activating PILRbeta does not have an ITIM but transduces activating signals by associating with the ITAM-bearing DAP12 adapter molecule. Both mouse PILRalpha and PILRbeta recognize mouse CD99, which is broadly expressed on various cells, including lymphocytes, and is involved in the regulation of immune responses. We herein report that sialylated O-linked sugar chains on CD99 are essential for the recognition by PILR. Mutations of one of two O-glycosylation sites on CD99 significantly reduced recognition of CD99 by the activating PILRbeta, whereas recognition by the inhibitory PILRalpha was not affected. In contrast, mutations of both O-glycosylation sites on CD99 completely abrogated the recognition by both PILRalpha and PILRbeta. PILR did not recognize CD99 treated with neuraminidase, and CD99 expressed on cells transfected with core 2 beta-1,6-N-acetylglucosaminyltransferase was not recognized by PILR. NK cells expressing endogenous activating PILRbeta receptors mediated cytotoxicity against cells expressing wild-type CD99 but not cells expressing mutant CD99 that lacked O-glycosylation sites. These findings indicate that sialylated O-linked sugar structures on CD99 play an important role in the recognition of PILR.