Protein tyrosine phosphorylation and dephosphorylation have been implicated in the growth and functional responses of hematopoietic cells. Recent studies have identified a novel protein tyrosine phosphatase, termed hematopoietic cell phosphatase (HCP) or PTP1C, that is predominantly expressed in hematopoietic cells. HCP encodes a cytoplasmic phosphatase that contains two src homology 2 (SH2) domains. Since SH2 domains have been shown to target the association of signal-transducing molecules with activated growth factor receptors containing intrinsic protein kinase activity, we assessed the association of HCP with two hematopoietic growth factor receptors, c-Kit and c-Fms. The results demonstrate that HCP transiently associates with ligand-activated c-Kit but not c-Fms and that this association occurs through the SH2 domains. In both colony-stimulating factor 1- and stem cell factor-stimulated cells, there is a marginal increase in tyrosine phosphorylation of HCP. Lastly, HCP can dephosphorylate autophosphorylated c-Kit and c-Fms in in vitro reactions. The potential role of HCP in stem cell factor signal transduction is discussed.