The membrane-associated adaptor protein LAX is a linker for activation of T cells (LAT)-like molecule that is expressed in lymphoid tissues. Upon stimulation of T or B cells, it is phosphorylated and interacts with Grb2 and the p85 subunit of PI3K. LAX, however, is not capable of replacing LAT in the TCR signaling pathway. In this study we report that upon T or B cell activation, the LAX protein was up-regulated dramatically. Although disruption of the LAX gene by homologous recombination had no major impact on lymphocyte development, it caused a significant reduction in CD23 expression on mature B cells. Interestingly, naive LAX−/− mice had spontaneous germinal center formation. Compared with normal T and B cells, LAX−/− T and B cells were hyperresponsive and had enhanced calcium flux, protein tyrosine phosphorylation, MAPK and Akt activation, and cell survival upon engagement of the T or B AgRs. Our data demonstrate that LAX functions as a negative regulator in lymphocyte signaling.