Killer cell inhibitory receptors (KIRs) inhibit NK and T cell cytotoxicity when recognizing MHC class I molecules on target cells. They possess two tandem intracytoplasmic immunoreceptor tyrosine-based inhibition motifs (ITIMs) that, when phosphorylated, each bind to the two Src homology 2 domain-bearing protein tyrosine phosphatases SHP-1 and SHP-2 in vitro. Using chimeric receptors having an intact intracytoplasmic KIR domain bearing both ITIMs (N+ C-KIR), a deleted domain containing the N-terminal ITIM only (N-KIR), or a deleted domain containing the C-terminal ITIM only (C-KIR), we examined the respective contributions of the two ITIMs in the inhibition of cell activation in two experimental models (a rat mast cell and a mouse B cell line) that have been widely used to analyze KIR functions. We found that the two KIR ITIMs play distinct roles. When coaggregated with immunoreceptor tyrosine-based activation motif-bearing receptors such as high-affinity IgE receptors or B cell receptors, the N+ C-KIR and the N-KIR chimeras, but not the C-KIR chimera, inhibited mast cell and B cell activation, became tyrosyl-phosphorylated, and recruited phosphatases in vivo. The N+ C-KIR chimera recruited SHP-1 as expected, but also SHP-2. Surprisingly, the N-KIR chimera failed to recruit SHP-1; however, it did recruit SHP-2. Consequently, the N-terminal ITIM is sufficient to recruit SHP-2 and to inhibit cell activation, whereas the N-terminal and the C-terminal ITIMs are both necessary to recruit SHP-1. The two KIR ITIMs, therefore, are neither mandatory for inhibition nor redundant. Rather than simply amplifying inhibitory signals, they differentially contribute to the recruitment of distinct phosphatases that may cooperate to inhibit cell activation.