In previous studies of phosphorylation in squid stellate ganglion neurons, we demonstrated that a specific multimeric phosphorylation complex characterized each cellular compartment. Although the endogenous protein profile of cell body extracts (giant fiber lobe, GFL), as determined by Coomassie staining, was similar to that of axoplasm from the giant axon, in this study we show that the protein phosphorylation profiles are qualitatively different. Whereas many axoplasm proteins were phosphorylated, including most cytoskeletal proteins, virtually all phosphorylation in perikarya was confined to low molecular weight compounds (<6 kDa). Because phosphorylation of exogenous substrates, histone and casein, was equally active in extracts from both compartments, failure to detect endogenous protein phosphorylation in cell bodies was attributed to the presence of more active phosphatases. To further explore the role of phosphatases in these neurons, we studied phosphorylation in the presence of serine/threonine and protein tyrosine phosphatase (PTP) inhibitors. We found that phosphorylation of axonal cytoskeletal proteins was modulated by okadaic acid-sensitive ser/thr phosphatases, whereas cell body phosphorylation was more sensitive to an inhibitor of protein tyrosine phosphatases, such as vanadate. Inhibition of PTPs by vanadate stimulated endogenous phosphorylation of GFL proteins, including cytoskeletal proteins. Protein tyrosine kinase activity was equally stimulated by vanadate in cell body and axonal whole homogenates and Triton X-100 free soluble extracts, but only the Triton X soluble fraction (membrane bound proteins) of the GFL exhibited significant activation in the presence of vanadate, suggesting higher PTP activities in this fraction than in the axon. The data are consistent with the hypothesis that neuronal protein phosphorylation in axons and cell bodies is modulated by different phosphatases associated with compartment-specific multimeric complexes.