Protein mono-(ADP-ribosyl)transferases (ADPRTs) catalyze transfer of the ADP-ribose moiety from nicotinamide adenine dinucleotide (NAD) to specific amino acids. We recently described presence of an enzyme with this activity on cytotoxic T cells (CTL). Incubation of CTL with micromolar concentrations of NAD causes inhibition of cell proliferation and cytolytic activity. ADPRT can be released by bacterial phosphoinositol specific phospholipase C, indicating that it is a glycosylphosphatidylinositol (GPI) anchored exo- enzyme. Enzymatic release of ADPRT results in inability of NAD to modulate CTL function. Expression of ADPRT was found to be regulated, in quiescent CTL ADPRT is expressed at significant levels, however, upon TCR crosslinking it is rapidly released by an anchor hydrolyzing mechanism. This results in relative insensitivity to the inhibitory action of NAD. The question how ADPRT regulates T cell functions was investigated by incubating CTL with radioactively labeled NAD which causes modification of several proteins, pointing to potential candidates in these regulatory processes. We found that the protein tyrosine kinase p56(lek) but not p59(fyn) exists in a digitonin resistant complex with a 40 kD protein, which in its ADP-ribosylated form suppresses p56(12ek) kinase activity. ADP-ribosylation of this protein is mediated by the arginine specific protein monoADPRT, presumably utilizing ecto-NAD as substrate. Release of the ADPRT by GPI-specific phospholipase C results in failure of ecto-NAD to downmodulate p56(lek) kinase activity. Concomitant to suppression of the kinase by ecto-NAD, CD8 mediated transmembrane signaling is found to be inhibited, whereas transmembrane signaling via CD3 is only slightly affected.