CTLA‐4 negatively regulates TCR signaling, although the molecular basis for this effect has yet to be elucidated. The cytoplasmic YVKM motif, while binding to phosphatidylinositol 3‐kinase, SHP‐2 and the AP‐1/AP‐2 clathrin adaptor complexes, has been reported to play no role in CTLA‐4 function. In contrast, in this study, we demonstrate that, although not essential, the YVKM motif contributes to optimal CTLA‐4 blockage of TCRζ or combined TCRζ/CD28 signaling. Significantly, dependency on the YVKM motif varied with the mode of anti‐receptor presentation, where soluble antibody ligation was more dependent on the presence of the motif than immobilized antibody. Previous studies have mainly relied on the use of immobilized antibody. Neither SHP‐2 binding, alterations in TCRζ chain phosphorylation, nor ZAP‐70 recruitment was involved in CTLA‐4 wild‐type or mutant inhibition. Overall, our findings clearly implicate the YVKM motif in optimal CTLA‐4 function.