Erythropoietin (Epo) regulates the proliferation and differentiation of erythroid precursors. The phosphorylation of proteins at tyrosine residues is critical in the growth signaling induced by Epo. This mechanism is regulated by the activities of both protein-tyrosine kinases and protein tyrosine phosphatases. The discovery of phosphotyrosine phosphatases that contain SH2 domains suggests roles for these molecules in growth factor signaling pathways. We found that Syp, a phosphotyrosine phosphatase, widely expressed in all tissues in mammals became phosphorylated on tyrosine after stimulation with Epo in M07ER cells engineered to express high levels of human EpoR. Syp was complexed with Grb2 in Epo-stimulated M07ER cells. Direct binding between Syp and Grb2 was also observed in vitro. Furthermore, Syp appeared to bind directly to tyrosine-phosphorylated EpoR in M07ER cells. Both NH2-terminal and COOH-terminal SH2 domains of Syp, made as glutathione S-transferase fusion proteins, were able to bind to the tyrosine-phosphorylated EpoR in vitro. These results suggest that Syp may be an important signaling component downstream of the EpoR and may regulate the proliferation and differentiation of hematopoietic cells.