Here, we describe the use of artificial intelligence to identify novel agonists of the SH2-containing 5' inositol phosphatase 1 (SHIP1). One of the compounds, K306, represents the most potent agonist identified to date. We find that K306 exhibits selectivity for SHIP1 vs. the paralog enzyme SHIP2, and this activation does not require the C2 domain of SHIP1 which other known SHIP1 agonists require. Thus, K306 represents a new class of SHIP1 agonists with a novel mode of agonism. Importantly, we find that K306 can suppress induction of inflammatory cytokines and iNOS in macrophages or microglia, but not by their SHIP1-deficient counterparts. K306 also reduces TNF-α production in vivo in an LPS-induced endotoxemia assay. Finally, we show that K306 enhances phagolysosomal degradation of synaptosomes and dead neurons by microglia revealing a novel function for SHIP1 that might be exploited therapeutically in dementia.