SH2-containing inositol phosphatase-1 (SHIP1) is a 5’ inositol phosphatase known to negatively regulate the signaling product of the phosphoinositide-3 kinase (PI3K) pathway, phosphatidylinositol (3,4,5)-trisphosphate (PIP₃). SHIP1 is recruited to a large number of inhibitory receptors expressed on invariant natural killer (iNKT) cells. We hypothesized that SHIP1 deletion would have major effects on iNKT cell development by altering the thresholds for positive and negative selection. Germline SHIP1 deletion has been shown to affect T cells, as well as other immune cell populations.  However, the role of SHIP1 on T cell function has been controversial and its participation on iNKT cell development and function has not been examined. We evaluated the consequences of SHIP1 deletion on iNKT cells using germline-deficient mice, chimeric mice, and conditionally deficient mice. We found that T cell and iNKT cell development are impaired in germline-deficient animals. However, this phenotype can be rescued by extrinsic expression of SHIP1. In contrast, SHIP1 is required cell autonomously for optimal iNKT cell cytokine secretion.  This suggests that SHIP1 calibrates the threshold of iNKT cell reactivity. These data further our understanding of how iNKT cell activation is regulated and provide insights into the biology of this unique cell lineage.