CTLA-4 is a negative regulator of T cell responses. Sequence analysis of this molecule reveals the presence of two cytoplasmic tyrosine residues at positions 165 and 182 that are potential Src homology (SH)-2 domain binding sites. The role of phosphorylation of these residues in CTLA-4-mediated signaling is unknown. Here, we show that sole TCR ligation induces ζ-associated protein (ZAP)-70-dependent tyrosine phosphorylation of CTLA-4 that is important for cell surface retention of this molecule. However, CTLA-4 tyrosine phosphorylation is not required for down-regulation of T cell activation following CD3-CTLA-4 coengagement. Specifically, inhibition of extracellular signal-regulated kinase (ERK) activation and of IL-2 production by CTLA-4-mediated signaling occurs in T cells expressing mutant CTLA-4 molecules lacking the cytoplasmic tyrosine residues, and in lck-deficient or ZAP-70-deficient T cells. Therefore, CTLA-4 function involves interplay between two different levels of regulation: phosphotyrosine-dependent cell surface retention and phosphotyrosine-independent association with signaling molecules.