Activation of the B-cell antigen receptor (BCR) signaling pathway contributes to the initiation and maintenance of B-cell malignancies and autoimmune diseases. The Bruton tyrosine kinase (Btk) is specifically required for BCR signaling as demonstrated by human and mouse mutations that disrupt Btk function and prevent B-cell maturation at steps that require a functional BCR pathway. Herein we describe a selective and irreversible Btk inhibitor, PCI-32765, that is currently under clinical development in patients with B-cell non-Hodgkin lymphoma. We have used this inhibitor to investigate the biologic effects of Btk inhibition on mature B-cell function and the progression of B cell-associated diseases in vivo. PCI-32765 blocked BCR signaling in human peripheral B cells at concentrations that did not affect T cell receptor signaling. In mice with collagen-induced arthritis, orally administered PCI-32765 reduced the level of circulating autoantibodies and completely suppressed disease. PCI-32765 also inhibited autoantibody production and the development of kidney disease in the MRL-Fas(lpr) lupus model. Occupancy of the Btk active site by PCI-32765 was monitored in vitro and in vivo using a fluorescent affinity probe for Btk. Active site occupancy of Btk was tightly correlated with the blockade of BCR signaling and in vivo efficacy. Finally, PCI-32765 induced objective clinical responses in dogs with spontaneous B-cell non-Hodgkin lymphoma. These findings support Btk inhibition as a therapeutic approach for the treatment of human diseases associated with activation of the BCR pathway.