SH-PTP2, a non-transmembrane-type protein-tyrosine phosphatase with two Src homology 2 domains, was previously shown to play a positive signaling role in the insulin-induced activation of Ras and mitogen-activated protein kinase. SH-PTP2 was shown to associate with a 115-kDa tyrosine-phosphorylated protein (pp115), as well as with insulin receptor substrate 1, in insulin-stimulated Chinese hamster ovary cells that overexpress human insulin receptors (CHO-IR cells). In vivo and in vitro binding experiments revealed that SH-PTP2 bound to pp115 through one or both of its SH2 domains. The pp115 protein was partially purified from insulin-stimulated CHO-IR cells that overexpress a catalytically inactive SH-PTP2 by a combination of immunoaffinity and lectin-affinity chromatography. A monoclonal antibody to pp115 was then generated by injecting the partially purified protein into mice. Experiments with this monoclonal antibody revealed that pp115 is a transmembrane protein with a domain exposed on the cell surface and that it binds to SH-PTP2 in response to insulin. The insulin receptor kinase appeared to phosphorylate pp115 on tyrosine residues both in vivo and in vitro. The extent of tyrosine phosphorylation of pp115 associated with SH-PTP2 was greatly increased in CHO-IR cells that overexpress catalytically inactive SH-PTP2 compared with that observed in CHO-IR cells overexpressing wild-type SH-PTP2. Furthermore, recombinant SH-PTP2 preferentially dephosphorylated pp115 in vitro, indicating that SH-PTP2 may catalyze the dephosphorylation of phosphotyrosine residues in pp115 after it binds to this protein. These results suggest that pp115 may act as a transmembrane anchor to which SH-PTP2 binds in response to insulin. Furthermore, pp115 may be a physiological substrate for both the insulin receptor kinase and SH-PTP2.