Hairy cells (HCs) are mature malignant B cells that contain a number of constitutively active signaling molecules including GTP-bound Rac1, protein kinase C, and Src family kinases. Because Rac1 is a component of the reactive oxidant species (ROS)-generating NADPH oxidase system, we investigated the role of this GTPase in ROS production in HCs. In this study, we show that ROS production in HCs involves a flavin-containing oxidase dependent on Ca2+, but not on GTP-Rac1 or protein kinase C. This suggests the involvement of the nonphagocytic NADPH oxidase NOX5, an enzyme found in lymphoid tissues, but not in circulating lymphocytes. By using RT-PCR and Southern and Western blotting and by measuring superoxide anion production in membrane fractions in the absence of cytosolic components, we demonstrate for the first time that HCs (but not circulating normal B cells or some other lymphoid cell types) express NOX5. We also demonstrate that inhibition of NADPH oxidase in HCs results in a selective increase in the activity of Src homology region 2 domain-containing phosphatase 1 (SHP-1). Furthermore, SHP-1 in HCs coimmunoprecipitates with tyrosine phosphorylated CD22 and localizes in the same cellular compartment as NOX5. This allows the inactivation of SHP-1 by NOX5-generated ROS and contributes to the maintenance of the constitutive activation of HCs.