The lymphoid-specific phosphatase (LYP) encoded by PTPN22 is involved in preventing spontaneous T-cell activation by dephosphorylating and inactivating T-cell receptor-associated Csk kinase. We have genotyped 396 type 1 diabetic patients and 1,178 control subjects of Caucasian descent from north central Florida and report a strong association between type 1 diabetes and a polymorphism (R620W) in the PTPN22 gene. The homozygous genotype for the T allele encoding the 620W residue is associated with an increased risk for developing type 1 diabetes (odds ratio [OR] = 3.4, P < 0.008), and the heterozygous genotype C/T had an OR of 1.7 (P = 6 × 10−6). The C/C homozygous genotype is protective against type 1 diabetes (OR = 0.5, P = 6 × 10−6). Furthermore, transmission disequilibrium analysis of 410 affected sibpair and simplex families of Caucasian descent indicated that the type 1 diabetes-associated T allele is transmitted more often (57.2%) than randomly expected (P < 0.003). Together with previous reports of the association between PTPN22 and type 1 diabetes, as well as rheumatoid arthritis and systemic lupus erythematosus, these results provide compelling evidence that LYP is a critical player in multiple autoimmune disorders.