Abstract Most systemic lupus erythematosus (SLE patients) exhibit whole-blood increased expression of type I interferon (IFN)-inducible transcripts, known as the “IFN signature”. A variant allele of the PTPN22 gene is associated with increased risk of SLE. We recently demonstrated that PTPN22-encoded lymphoid tyrosine phosphatase (Lyp) promotes Toll-like receptor (TLR)-driven type 1 IFN production and type I IFN-dependent host defense and immunoregulation. Further, the disease-associated variant LypR620W ("LypW") shows reduced function in promoting TLR-driven type 1 IFN-dependent immunity. Here we report that PBMC from LypW carrier SLE patients exhibit reduced type 1 IFN and type 1 IFN-inducible gene expression upon TLR7 activation. The percentages of plasmacytoid dendritic cells (pDC) producing IFNα, as well as the per-cell production of IFNα, are decreased LypW carrier SLE patients. Notably, we found that similar numbers of LypW carriers and non-carriers in SLE patients exhibit elevated IFN gene signatures in whole blood. Together, these data indicate that LypW SLE patient display reduced mononuclear cell capacity for TLR-induced type 1 IFN, despite exhibiting increased systemic type 1 IFN signaling. The findings raise the possibility that autoimmune phenomena in LypW SLE patients may reflect defective type 1 IFN-dependent host defense. Further, they suggest that therapeutic strategies to boost type 1 IFN-driven processes may benefit the LypW carrier subgroup of SLE patients.