The association of the murine motheaten phenotype of severe hemopoietic dysregulation with loss of PTP1C tyrosine phosphatase activity indicates a critical role for this SH2 domain-containing phosphotyrosine phosphatase in the regulation of hemopoietic cell growth and differentiation. To explore the molecular basis for PTP1C effects on hematopoiesis, we have investigated the possibility that this enzyme interacts with the product of the Vav proto-oncogene, a putative guanine nucleotide exchange factor expressed exclusively in hemopoietic cells. Our data indicate that PTP1C physically associates with Vav in murine spleen cells and in EL4 T lymphoma and P815 mastocytoma cells, and that this interaction is increased following mitogenic stimulation and the induction of both PTP1C and Vav tyrosine phosphorylation. The results also reveal tyrosine phosphatase activity to be present in Vav immunoprecipitates from stimulated splenic and P815 cells and suggest that a major portion of total cellular PTP1C catalytic activity is associated with Vav. As Vav-associated tyrosine phosphatase activity was not detected in PTP1C-deficient motheaten splenic cells, it appears that PTP1C accounts for most, if not all, Vav-coprecipitable tyrosine phosphatase activity in normal cells. The data also demonstrate the capacity of the Vav SH2 domain alone to bind to PTP1C in activated P815 cells, but suggest a role for the two Vav SH3 domains in enhancing this interaction. In addition, the results reveal PTP1C association with two other molecules implicated in Ras activation, the Grb2 adaptor protein and mSos1, a GTP/GDP exchanger for Ras. PTP1C therefore has the capacity to bind and potentially modulate various signaling effectors involved in activation of Ras or Ras-related proteins, and, accordingly, regulation of Ras activation represents a possible mechanism whereby PTP1C influences hemopoietic cellular responses.