The transmembrane nature of the receptor-like protein tyrosine phosphatases (PTPases) suggests that they transduce as yet unidentified extracellular signals to intracellular events via a phosphotyrosyl-protein dephosphorylation step, although little is known of their regulation and cellular activities. Structure/function studies of PTP alpha demonstrate that both catalytic domains are required for full enzymatic efficiency and that interdomain interactions may modulate PTP alpha activity and specificity. Overexpression of PTP alpha results in cell transformation and tumorigenesis, likely as a consequence of the ability of PTP alpha to dephosphorylate and activate the c-src tyrosine kinase. This suggests a role for PTP alpha in normal cell proliferation. PTP alpha is so far unique among the PTPases in terms of its oncogenic potential, and overexpression or deregulation of PTP alpha may be involved in the genesis, progression or maintenance of certain tumor states.