Intercellular adhesion molecule-3 (ICAM-3), a ligand for beta2 integrins, elicits a variety of activation responses in lymphocytes. We describe a functional mapping study that focuses on the 37-residue cytoplasmic region of ICAM-3. Carboxyl-terminal truncations delineated portions involved in T cell antigen receptor costimulation, homotypic aggregation, and cellular spreading. Truncation of the membrane distal 25 residues resulted in loss of T cell antigen receptor costimulation as determined by interleukin 2 secretion. Aggregation and cell spreading were sensitive to truncation of the membrane distal and proximal thirds of the cytoplasmic portion. Phosphoamino acid analysis revealed that ICAM-3 from activated cells contained phosphoserine and phosphopeptide mapping identified Ser489 as a site of phosphorylation in vivo. Mutation of Ser489 or Ser515 to alanine blocked interleukin 2 secretion, aggregation and cell spreading, while mutation of other serine residues affected only a subset of functions. Ser489 was a phosphorylation site in vitro for recombinant protein kinase Ctheta. Finally, treatment of Jurkat cells with chelerythrine chloride, a protein kinase C inhibitor, prevented ICAM-3-triggered spreading. This study delineates separable regions and amino acid residues within the cytoplasmic portion of ICAM-3 that are important for T cell function.