A C1858T (R620W) variation in the PTPN22 gene encoding the tyrosine phosphatase LYP is a major risk factor for human autoimmunity. LYP is a known negative regulator of signaling through the T cell receptor (TCR), and murine Ptpn22 plays a role in thymic selection. However, the mechanism of action of the R620W variant in autoimmunity remains unclear. One model holds that LYP-W620 is a gain-of-function phosphatase that causes alterations in thymic negative selection and/or thymic output of regulatory T cells (Treg) through inhibition of thymic TCR signaling. To test this model, we generated mice in which the human LYP-W620 variant or its phosphatase-inactive mutant are expressed in developing thymocytes under control of the proximal Lck promoter. We found that LYP-W620 expression results in diminished thymocyte TCR signaling, thus modeling a "gain-of-function" of LYP at the signaling level. However, LYP-W620 transgenic mice display no alterations of thymic negative selection and no anomalies in thymic output of CD4(+)Foxp3(+) Treg were detected in these mice. Lck promoter-directed expression of the human transgene also causes no alteration in thymic repertoire or increase in disease severity in a model of rheumatoid arthritis, which depends on skewed thymic selection of CD4(+) T cells. Our data suggest that a gain-of-function of LYP is unlikely to increase risk of autoimmunity through alterations of thymic selection and that LYP likely acts in the periphery perhaps selectively in regulatory T cells or in another cell type to increase risk of autoimmunity.