Human LAR is a transmembrane receptor-like protein whose cytoplasmic region contains two tandemly duplicated domains homologous to protein tyrosine phosphatases (PTPases). Whereas the membrane-proximal domain I has enzymatic activity, the membrane-distal domain II has no apparent catalytic activity but seems to have a regulatory function. In order to study structure-function relationships of the LAR PTPase, LAR domain I was expressed in Escherichia coli, and mutants that have reduced catalytic activity or reduced thermostability were isolated and characterized. We isolated 18 unique hydroxylamine-induced missense mutations in the LAR domain I segment, of which three were temperature-sensitive. Five additional temperature-sensitive mutations were isolated using N-methyl-N'-nitro-N-nitrosoguanidine. All eight temperature-sensitive mutations are confined within a short segment of the LAR domain I sequence between amino acid positions 1329 and 1407. To examine whether this region is particularly prone to temperature-sensitive mutations, tyrosine at amino acid position 1379 was changed to a phenylalanine by oligonucleotide-directed mutagenesis. This mutant, Y1379-F, was indeed temperature-sensitive. We also isolated a revertant of a temperature-sensitive mutant. The revertant contained a second-site mutation (C1446-Y) that suppresses several temperature-sensitive mutations and also enhances the folding of LAR protein produced in E. coli.