Abstract FCRL4 is an immunoregulatory receptor expressed by a subpopulation of memory B cells. These tissue-based cells express increased levels of the src-family kinases HCK and FGR. In this study, we investigate the roles of these src-family kinases in FCRL4-mediated immunoregulation of B cells in the context of previously unrecognized palmitoylation of the receptor. We observed enhanced phosphorylation of FCRL4 on tyrosine residues in the presence of the HCK p59 or FGR. This phosphorylation was markedly reduced in assays using a palmitoylation-defective mutant of FCRL4. In reporter gene studies, we observe that FCRL4 expression enhances CpG-mediated activation of NF-κB signaling. Surprisingly, using a reporter gene linked to activation of the MAPK substrate Elk-1 in response to Ag receptor ligation, we find that FCRL4 has inhibitory activity in cells coexpressing FGR but an activating function in cells coexpressing HCK p59. We provide evidence that in primary memory B cells, expression of FCRL4 leads to increased expression of IL-10 in the presence of FGR or HCK p59 in response to CpG, but increased levels of IFN-γ only in the context of coexpression of FGR. Our study supports the specific requirement of HCK p59 and FGR src-family kinases for FCRL4-mediated immunomodulatory activity and indicates that palmitoylation serves as an additional level of regulatory control of FCRL4.