Fas ligand (FasL) not only induces apoptosis in Fas receptor-bearing target cells, it is also able to transmit signals into the FasL-expressing cell via its intracellular domain (ICD). Recently, we described a Notch-like proteolytic processing of FasL that leads to the release of the FasL ICD into the cytoplasm and subsequent translocation into the nucleus where it may influence gene transcription. To study the molecular mechanism underlying such reverse FasL signaling in detail and to analyze its physiological importance in vivo, we established a knockout/knockin mouse model, in which wild-type FasL was replaced with a deletion mutant lacking the ICD. Our results demonstrate that FasL ICD signaling impairs activation-induced proliferation in B and T cells by diminishing phosphorylation of phospholipase C γ, protein kinase C, and extracellular signal-regulated kinase 1/2. We also demonstrate that the FasL ICD interacts with the transcription factor lymphoid-enhancer binding factor-1 and inhibits lymphoid-enhancer binding factor-1-dependent transcription. In vivo, plasma cell numbers, generation of germinal center B cells, and, consequently, production of antigen-specific immunoglobulin M antibodies in response to immunization with T cell-dependent or T cell-independent antigen are negatively affected in presence of the FasL ICD, suggesting that FasL reverse signaling participates in negative fine-tuning of certain immune responses.