Crescentic glomerulonephritis (Crgn) is a complex disease where the initial insult is often the glomerular deposition of antibodies against intrinsic or deposited antigens in the glomerulus. The role of Fc receptors in the induction and progression of Crgn is increasingly recognized, and our previous studies have shown that copy number variation in Fcgr3 partially explains the genetic susceptibility of the Wistar-Kyoto (WKY) rat to nephrotoxic nephritis, a rat model of Crgn. The Fcgr3-related sequence (Fcgr3-rs) is a novel rat-specific Fc receptor with a cytoplasmic domain 6 amino acids longer than its paralogue, Fcgr3. The Fcgr3-rs gene is deleted from the WKY rat genome, and this deletion is associated with enhanced macrophage activity in this strain. Here, we investigated the mechanism by which the deletion of Fcgr3-rs in the WKY strain leads to increased macrophage activation. By lentivirus-mediated gene delivery, we generated stably transduced U937 cells expressing either Fcgr3-rs or Fcgr3. In these cells, which lack endogenous Fcgr3 receptors, we show that Fcgr3-rs interacts with the common Fc-γ chain but that Fc receptor-mediated phagocytosis and signaling are defective. Furthermore, in primary macrophages, expression of Fcgr3-rs inhibits Fc receptor-mediated functions, because WKY bone marrow-derived macrophages transduced with Fcgr3-rs had significantly reduced phagocytic activity. This inhibitory effect on phagocytosis was mediated by the novel cytoplasmic domain of Fcgr3-rs. These results suggest that Fcgr3-rs may act to inhibit Fcgr3-mediated signaling and phagocytosis and could be considered as a novel mechanism in the modulation of Fc receptor-mediated cell activation in autoimmune diseases.