Unbalanced production of proinflammatory cytokines and type I interferons in immune responses may lead to immunopathology; thus, the mechanisms that ensure the beneficial production of proinflammatory cytokines and type I interferons are of particular importance. Here we demonstrate that the phosphatase SHP-1 negatively regulated Toll-like receptor-mediated production of proinflammatory cytokines by inhibiting activation of the transcription factor NF-kappaB and mitogen-activated protein kinase. Simultaneously, SHP-1 increased the production of type I interferon mediated by Toll-like receptors and the helicase RIG-I by directly binding to and inhibiting activation of the kinase IRAK1. Our data demonstrate that SHP-1 contributes to immune homeostasis by balancing the production of proinflammatory cytokines and type I interferons in the innate immune response.