The transmembrane phosphatase CD45 regulates both Lck activity and T cell receptor (TCR) signaling. Here we have tested whether the large ectodomain of CD45 has a role in this regulation. A CD45 chimera containing the large ectodomain of CD43 efficiently rescues TCR signaling in CD45-null T cells, whereas CD45 chimeras containing small ectodomains from other phosphatases do not. Both basal Lck activity in unstimulated cells and the TCR-induced increase in tyrosine phosphorylation of the TCR ζ-chain and in Lck activity depend on the expression of CD45 with a large ectodomain. Unlike CD45 chimeras containing small ectodomains, both the CD45 chimera with a large ectodomain and wild-type CD45 itself are partially localized to glycosphingolipid-enriched membranes (GEMs). Taken together, these data show that the large CD45 ectodomain is required for optimal TCR signaling.