TCR stimulation not only initiates positive signals for T cell activation, but also induces negative signals that down-regulate T cells. We previously reported that Sprouty1, a negative regulator of Ras-MAPK pathway of receptor tyrosine kinases, was induced by TCR signal and inhibited TCR signaling in CD4+ T cell clones. In this study, we addressed the mechanism underlying Sprouty1 inhibition of T cells. When overexpressed in Jurkat T cells, Sprouty1 inhibited TCR signal-induced IL-2 transcription, and also AP-1, NFAT, and NF-kappaB activation, which suggests that Sprouty1 acts at proximal TCR signalosome. Accordingly, we found that Sprouty1 translocated to immune synapse upon TCR engagement in both Jurkat cells and activated primary T cells and interacted with various signaling molecules in the TCR signalosome, such as linker for activation of T cells (LAT), phospholipase C-gamma1 (PLC-gamma1), c-Cbl/Cbl-b, and HPK1. Sprouty1 inhibited LAT phosphorylation, leading to decreased MAPK activation and IL-2 production. Deletion of C-terminal 54 amino acids in Sprouty1 abolished its inhibitory effect and this deletion mutant was unable to translocate to immune synapse and interact with LAT. Overall, our data suggest that Sprouty1 induced by TCR signal negatively regulates further TCR signaling by interacting with proximal signaling molecules in immune synapse, providing a novel regulatory mechanism of T cells.