MyD-1 (CD172) is a member of the family of signal regulatory phosphatase (SIRP) binding proteins, which is expressed on human CD14⁺ monocytes and dendritic cells. We now show a novel role for MyD-1 in the regulation of the innate immune system by pathogen products such as lipopolysaccharide (LPS), purified protein derivative (PPD), and Zymosan. Specifically, we demonstrate that ligation of MyD-1 on peripheral blood mononuclear cells (PBMCs) inhibits tumor necrosis factor alpha (TNFα) secretion but has no effect on other cytokines induced in response to each of these products. In an attempt to understand the molecular mechanisms underlying this surprisingly selective effect we investigated signal transduction pathways coupled to MyD-1. Ligation of the SIRP was found to recruit the tyrosine phosphatase SHP-2 and promote sequential activation of phosphatidylinositol (PI) 3-kinase, phospholipase D, and sphingosine kinase. Inhibition of LPS-induced TNFα secretion by MyD-1 appears to be mediated by this pathway, as the PI 3-kinase inhibitor wortmannin restores normal LPS-driven TNFα secretion. MyD-1-coupling to this PI 3-kinase-dependent signaling pathway may therefore present a novel target for the development of therapeutic strategies for combating TNFα production and consequent inflammatory disease. (Blood. 2003;102:2532-2540)