The regulation of receptor-like protein tyrosine phosphatases (RPTPs) is not well understood. Although CD45 can be negatively regulated by dimerization, how dimerization is modulated is unclear. Here we show that various isoforms of CD45 differentially homodimerize in T cells. The dimerization is modulated by the sialylation and O-glycosylation of alternatively spliced CD45 exons in the extracellular domain. Thus, the smallest isoform, CD45RO--which undergoes the least extracellular sialylation and O-glycosylation--homodimerizes with the highest efficiency, resulting in decreased signaling via the T cell receptor. Because CD45 is required for T cell activation, our findings may reveal a mechanism that contributes to the termination of the primary T cell response. Our results not only demonstrate the biological significance of alternative splicing in the immune system, but also suggest a model for regulating RPTP dimerization and function.