The cell adhesion molecule, carcinoembryonic Ag-related cellular adhesion molecule 1, shown by others to both activate and inhibit T cell proliferation, exhibits a reciprocal relationship to IL-2R expression over the time course of activation of PBMCs, and upon Ab ligation, inhibits both the production of IL-2 and cell proliferation. Carcinoembryonic Ag-related cellular adhesion molecule 1 associates with CD3 and is found in lipid rafts of PBMCs, is phosphorylated on the immunoreceptor tyrosine-based inhibitory motifs (ITIMs) of the -4L isoform, and associates with Src homology protein-1, providing an explanation for its inhibitory activity. When the ITIM-containing -4L and non-ITIM-containing -4S isoforms are transfected into Jurkat cells that produce, but do not depend on IL-2 for growth, both IL-2 production and cell proliferation are differentially inhibited, demonstrating that the two isoforms signal via different pathways. When the two isoforms are transfected into Kit-225 cells that depend on IL-2 for growth, IL-2Rβ and γ, but not α subunits are down-regulated, and the -4L, but not the -4S isoform inhibits cell proliferation by 6-fold in an IL-2 dose-response study.