The SH2-containing inositol-5'-phosphatase, SHIP, represses the proliferation, survival, and activation of hematopoietic cells, in large part by translocating to membranes following extracellular stimulation and hydrolysing the phosphatidylinositol-3-kinase (PI3K)-generated second messenger PI-3,4,5-P3 (PIP3) to PI-3,4-P2. SHIP-/- mice have, as a result, an increased number of monocyte/macrophages because their progenitors display enhanced survival and proliferation, as well as more rapid differentiation. Interestingly, SHIP-/- mice do not display lipopolysaccharide (LPS)- or CpG oligonucleotide-induced tolerance because this blunting of inflammatory mediator production is contingent upon LPS- and CpG-induced upregulation of SHIP in their macrophages and mast cells. This upregulation is mediated via the production of autocrine-acting TGFbeta which is induced via the MyD88-dependent pathway. The increased levels of SHIP then inhibit both MyD88-dependent and independent signaling. Intriguingly, SHIP-/- peritoneal and alveolar macrophages produce less nitric oxide (NO) than wild-type macrophages because they have constitutively high arginase I levels and this enzyme competes with inducible nitric oxide synthase (iNOS) for the substrate L-arginine. It is likely that, in the face of chronically elevated PIP3 levels in their myeloid progenitors, SHIP-/- mice display a skewed development away from M1 (killer) macrophages towards M2 (healing) macrophages. This suggests that SHIP plays a critical role in programming macrophages.