The ability of the immune system to respond appropriately to foreign antigen is dependent on a delicate balance of activating and inhibitory signals. Recently, the role of cell surface inhibitory receptors in attenuating immune responses, thereby preventing pathologic conditions including autoimmunity and atopy, has been recognized. It is postulated that the beneficial effects of intravenous gamma globulin in the treatment of immune disorders may be attributable, at least in part, to engagement of Fc gamma RIIB, a member of the recently described family of immune inhibitory receptors. Recent genetic and biochemical studies have identified the SH2 domain-containing inositol 5-phosphatase (SHIP) as a critical effector in Fc gamma RIIB inhibitory signaling. This review summarizes recent work from our laboratory and others aimed to define the mechanism(s) by which Fc gamma RIIB and its effector, SHIP, inhibit immune responses. Elucidation of these mechanisms may lead to the development of therapeutic strategies for the treatment of autoimmune and inflammatory pathologies that specifically target Fc gamma RIIB or its effector(s).