Protein tyrosine phosphatases play critical roles in a number of cellular signal transduction pathways. Receptor-like PTPases such as CD45 are essential for antigen-induced proliferative responses of T-cells. Intracellular PTPases have been shown to associate with specific growth factor receptors and this association has a dramatic effect on receptor signaling mechanisms. Other phosphatases (e.g., the product of the CDC25 gene) are essential for cell cycle progression. It appears that the cellular location of the intracellular PTPases plays an important role in defining the substrate specificity. Phosphatases are also present in both pathogenic bacteria and viruses. These PTPases most likely function to disrupt important signal transduction pathways present in the host. More than 30 different phosphatases have been cloned and characterized. A detailed understanding of their catalytic properties suggests that all PTPases use a common mechanism for removing phosphatase from various phosphoproteins. Two PTPase structures recently have been determined. The structural information along with biochemical and kinetic data provides a basis for understanding the catalytic properties of these enzymes.