The regulation of T cell activation and adhesion by CD43 (leukosialin, sialophorin) has been thought to be mainly a function of the large size and negative charge of the extracellular domain of the protein. In this work, we demonstrate that the cytoplasmic tail is both necessary and sufficient for the negative regulatory effect of CD43 on cell-cell adhesion. Expression of mutant CD43 proteins in primary T cells from CD43-deficient mice demonstrated that the antiproliferative effect of CD43 is also dependent upon the cytoplasmic tail. In contrast, Ab-mediated costimulation through CD43 does not require the intracellular domain of CD43. These data demonstrate that CD43 primarily serves as a negative regulator of T cell activation and adhesion, and that this is mediated not exclusively by passive effects of the extracellular domain, but requires participation of the cytoplasmic tail, perhaps through interactions with the cytoskeleton, or alternatively, active regulation of intracellular signaling pathways.