Upon encountering macrophage colony-stimulating factor (M-CSF), human monocytes undergo a series of cellular signaling events leading to an increase in Akt activity. However, the regulation of these events is not completely understood. Because the inositol 5'-phosphatase SHIP-1 is an important regulator of intracellular levels of phosphatidylinositol 3,4,5-trisphosphate, an important second messenger necessary for Akt activation, we hypothesized that SHIP-1 was involved in the regulation of M-CSF receptor (M-CSF-R)-induced Akt activation. In the human monocytic cell line, THP-1, SHIP-1 became tyrosine-phosphorylated following M-CSF activation in a Src family kinase-dependent manner. Transfection of 3T3-Fms cells, which express the human M-CSF-R, with wild-type SHIP-1 showed that SHIP-1 was necessary for the negative regulation of M-CSF-induced Akt activation. In THP-1 cells, SHIP-1 bound Lyn, independent of the kinase activity of Lyn, following M-CSF activation. Utilizing a glutathione S-transferase fusion protein, we found that SHIP-1 bound to Lyn via the SHIP-1 Src homology 2 domain. Furthermore, transfection of THP-1 cells with a wild-type SHIP-1 construct reduced NF-kappaB-dependent transcriptional activation of a reporter gene, whereas a SHIP-1 Src homology 2 domain construct resulted in an increase in NF-kappaB activation. Additionally, in 3T3-Fms cells, Lyn enhanced the ability of SHIP-1 to regulate Akt activation by stabilizing SHIP-1 at the cellular membrane. Finally, macrophages isolated from both SHIP-1- and Lyn-deficient mice exhibited enhanced Akt phosphorylation following M-CSF stimulation. These data provide the first evidence of the involvement of both SHIP-1 and Lyn in the negative regulation of M-CSF-R-induced Akt activation.