The signaling lymphocytic activation molecule family of receptors has been implicated in the pathophysiology of autoimmunity in humans and mice. One member of the family, Ly108, was strongly linked to lupus susceptibility in mice. High expression of a Ly108 isoform, Ly108-1, was observed in lymphocytes of lupus-prone mice. Herein, we examined the molecular basis for the influence of Ly108 on lupus susceptibility by studying Ly108 signal transduction in T cells. We observed that Ly108 was able to mediate a tyrosine phosphorylation signal implicating Ly108, Vav-1, and c-Cbl in a manner strictly dependent on engagement of the extracellular domain of Ly108 and co-expression of the Src homology 2 (SH2) domain-containing adaptor signaling lymphocytic activation molecule (SLAM)-associated protein (SAP). Evaluation of T cells from mice carrying mutations in the SAP-FynT pathway indicated that Ly108-triggered protein tyrosine phosphorylation was due to the capacity of SAP to recruit FynT. Importantly, Ly108-1 was more apt at triggering tyrosine phosphorylation signals in T cells when compared with the predominant Ly108 isoform found in non-lupus-prone mice, Ly108-2. This difference was due in part to the presence in Ly108-1 of a unique intra-cytoplasmic tyrosine-based motif that promoted Ly108 signal transduction. Together these data provided a molecular explanation for the involvement of Ly108 in lupus susceptibility in mice.