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Mutations in the adaptor protein PSTPIP1 cause a spectrum of autoinflammatory diseases, including PAPA and PAMI; however, the mechanism underlying these diseases remains unknown. Most of these mutations lie in PSTPIP1 F-BAR domain, which binds to LYP, a protein tyrosine phosphatase associated with arthritis and lupus. To shed light on the mechanism by which these mutations generate autoinflammatory disorders, we solved the structure of the F-BAR domain of PSTPIP1 alone and bound to the C-terminal homology segment of LYP, revealing a novel mechanism of recognition of Pro-rich motifs by proteins in which a single LYP molecule binds to the PSTPIP1 F-BAR dimer. The residues R228, D246, E250, and E257 of PSTPIP1 that are mutated in immunological diseases directly interact with LYP. These findings link the disruption of the PSTPIP1/LYP interaction to these diseases, and support a critical role for LYP phosphatase in their pathogenesis.