FcgammaR-mediated phagocytosis of IgG-coated particles is a complex process involving the activation of multiple signaling enzymes and is regulated by the inositol phosphatases PTEN (phosphatase and tensin homolog deleted on chromosome 10) and SHIP-1 (Src homology [SH2] domain-containing inositol phosphatase). In a recent study we have demonstrated that SHIP-2, an inositol phosphatase with high-level homology to SHIP-1, is involved in FcgammaR signaling. However, it is not known whether SHIP-2 plays a role in modulating phagocytosis. In this study we have analyzed the role of SHIP-2 in FcgammaR-mediated phagocytosis using independent cell models that allow for manipulation of SHIP-2 function without influencing the highly homologous SHIP-1. We present evidence that SHIP-2 translocates to the site of phagocytosis and down-regulates FcgammaR-mediated phagocytosis. Our data indicate that SHIP-2 must contain both the N-terminal SH2 domain and the C-terminal proline-rich domain to mediate its inhibitory effect. The effect of SHIP-2 is independent of SHIP-1, as overexpression of dominant-negative SHIP-2 in SHIP-1-deficient primary macrophages resulted in enhanced phagocytic efficiency. Likewise, specific knockdown of SHIP-2 expression using siRNA resulted in enhanced phagocytosis. Finally, analysis of the molecular mechanism of SHIP-2 down-regulation of phagocytosis revealed that SHIP-2 down-regulates upstream activation of Rac. Thus, we conclude that SHIP-2 is a novel negative regulator of FcgammaR-mediated phagocytosis independent of SHIP-1.