Many agents that activate hematopoietic cells use phosphatidylinositol 3,4,5-trisphosphate (PtdIns 3,4,5-P3) to initiate signaling cascades. The SH2 domain-containing 5′ phosphatase, SHIP1, regulates hematopoietic cell function by opposing the action of phosphatidylinositol 3-kinase and reducing the levels of PtdIns 3,4,5-P3. Activation of the cyclic AMP-dependent protein kinase (PKA) also opposes many of the proinflammatory responses of hematopoietic cells. We tested to see whether the activity of SHIP1 was regulated via phosphorylation with PKA. We prepared pure recombinant SHIP1 from HEK-293 cells and found it can be rapidly phosphorylated by PKA to a stoichiometry of 0.6 mol of PO4/mol of SHIP1. In 32P-labeled HEK-293 cells transfected with SHIP1, stimulation with Sp-adenosine 3′,5′-cyclic monophosphorothioate triethylammonium salt hydrate (Sp-cAMPS) or activation of β-adrenergic receptor increased the phosphorylation state of SHIP1. Inhibition of protein phosphatase activity with okadaic acid also increased the phosphorylation of SHIP1. Phosphorylation of SHIP1 in vitro or in cells by PKA increased the 5′ phosphatase activity of SHIP1 by 2-3-fold. Elevation of Ca2+ in DT40 cells in response to B cell receptor cross-linking, an indicator of PtdIns 3,4,5-P3 levels, was markedly blunted by pretreatment with Sp-cAMPS. This effect was absent in SHIP-/-DT40 cells showing that the effect of Sp-cAMPS in DT40 cells is SHIP1-dependent. Sp-cAMPS also blunted the ability of the B cell receptor to increase the phosphorylation of Akt in DT40 and A20 cells. Overall, activation of G protein-coupled receptors that raise cyclic AMP cause SHIP1 to be phosphorylated and stimulate its inositol phosphatase activity. These results outline a novel mechanism of SHIP1 regulation.