In a recessive ENU mutagenesis screen for embryonic lethality, we identified a mouse pedigree with a missense mutation of SHIP1 (SHIP1(el20)) leading to an amino acid substitution I641T in the inositol-5'-phosphatase domain that represses phosphatidylinositol-3-kinase signaling. Despite detectable expression of functional SHIP1 protein, the phenotype of homozygous SHIP1(el20/el20) mice was more severe than gene-targeted SHIP1-null (SHIP1(-/-)) mice. Compared with age-matched SHIP1(-/-) mice, 5-week-old SHIP1(el20/el20) mice had increased myeloid cells, serum IL-6 levels, marked reductions in lymphoid cells, and died by 7 weeks of age with infiltration of the lungs by activated macrophages. Bone marrow transplantation demonstrated that these defects were hematopoietic-cell-autonomous. We show that the el20 mutation reduces expression in SHIP1(el20/el20) macrophages of both SHIP1 and s-SHIP, an isoform of SHIP1 generated by an internal promoter. In contrast, SHIP1(-/-) macrophages express normal levels of s-SHIP. Compound heterozygous mice (SHIP1(-/el20)) had the same phenotype as SHIP1(-/-) mice, thus providing genetic proof that the more severe phenotype of SHIP1(el20/el20) mice is probably the result of concomitant loss of SHIP1 and s-SHIP. Our results suggest that s-SHIP synergizes with SHIP1 for suppression of macrophage activation, thus providing the first evidence for a role of s-SHIP in adult hematopoiesis.