Protein tyrosine phosphatases (PTPs) are known to be regulated by phosphorylation, localization, and protein-protein interactions. More recently, redox-dependent inactivation has emerged as a critical factor in attenuating PTP activity in response to cellular stimuli. The tandem Src homology 2 domain-containing PTPs (SHPs) belong to the family of nonreceptor PTPs whose activity can be modulated by reversible oxidation in vivo. Herein we have investigated in vitro the kinetic and mechanistic details of reversible oxidation of SHP-1 and SHP-2. We have confirmed the susceptibility of the active site cysteines of SHPs to oxidative inactivation, with rate constants for oxidation similar to other PTPs (2-10 M(-1) s(-1)). Both SHP-1 and SHP-2 can be reduced and reactivated with the reductants DTT and gluthathione, whereas only the catalytic domain of SHP-2 is subject to reactivation by thioredoxin. Stabilization of the reversible oxidation state of the SHPs proceeds via a novel mechanism unlike for other PTPs wherein oxidation yields either a disulfide between the catalytic cysteine and a nearby "backdoor" cysteine or a sulfenylamide bond with the amide backbone nitrogen of the adjacent amino acid. Instead, in the reversibly oxidized and inactivated SHPs, the catalytic cysteine is rereduced while two conserved backdoor cysteines form an intramolecular disulfide. Formation of this backdoor-backdoor disulfide is dependent on the presence of the active site cysteine and can proceed via either active site cysteine-backdoor cysteine intermediate. Removal of both backdoor cysteines leads to irreversible oxidative inactivation, demonstrating that these two cysteines are necessary and sufficient for ensuring reversible oxidation of the SHPs. Our results extend the mechanisms by which redox regulation of PTPs is used to modulate intracellular signaling pathways.