Tyrosine phosphorylation of Shc in response to B cell Ag receptor (BCR) engagement creates binding sites for the Src homology 2 (SH2) domain of Grb2. This facilitates the recruitment of both Grb2. Sos complexes and Grb2. SHIP complexes to the plasma membrane where Sos can activate Ras and SH2 domain-containing inositol phosphatase (SHIP) can dephosphorylate phosphatidylinositol 3,4,5-trisphosphate. Given the importance of Shc phosphorylation, we investigated the mechanism by which the BCR stimulates this response. We found that both the SH2 domain and phosphotyrosine-binding (PTB) domain of Shc are important for BCR-induced tyrosine phosphorylation of Shc and the subsequent binding of Grb2 to Shc. The unexpected finding that the PTB domain of Shc is required for Shc phosphorylation was investigated further. Because the major ligand for the Shc PTB domain is SHIP, we asked whether the interaction of Shc with SHIP was required for BCR-induced tyrosine phosphorylation of Shc. Using SHIP-deficient DT40 cells, we show that SHIP is necessary for the BCR to induce significant levels of Shc tyrosine phosphorylation. BCR-induced tyrosine phosphorylation of Shc could be restored in the these cells by expressing wild-type SHIP but not by expressing a mutant form of SHIP that cannot bind to Shc. This suggests that BCR-induced tyrosine phosphorylation of Shc may depend on the binding of SHIP to the Shc PTB domain. Thus, we have described a novel role for SHIP in BCR signaling, promoting the tyrosine phosphorylation of Shc.