The B-cell receptor CD22 binds sialic acid linked alpha-2-6 to terminal galactose residues on N-linked oligosaccharides associated with several cell-surface glycoproteins. The first of these sialoglycoproteins to be identified was the receptor-linked phosphotyrosine phosphatase CD45, which is required for antigen/CD3-induced T-cell activation. In the present work, we examine the effect of interaction between the extracellular domain of CD45 and CD22 on T-cell activation. Using soluble CD22-immunoglobulin fusion proteins and T cells expressing wild-type and chimeric CD45 forms, we show that engagement of CD45 by soluble CD22 can modulate early T-cell signals in antigen receptor/CD3-mediated stimulation. We also show that addition of sialic acid by beta-galactoside alpha-2,6-sialyltransferase to the CD22 molecule abrogates interactions between CD22 and its ligands. Together, these observations provide direct evidence for a functional role of the interaction between the extracellular domain of CD45 and a natural ligand and suggest another regulatory mechanism for CD22-mediated ligand engagement