To investigate the potential role of protein-tyrosine phosphatases (PTPs) in regulated secretion, cellular PTP activity was measured in pancreatic beta cell lines after exposure to insulin secretagogues. A peak of elevated PTP activity was detected in whole cell lysates after 15-20 min of treatment of the cells with high KCl, glucose, or TPA, which did not appear upon treatment with control compounds. Neither was it detected in cells that do not undergo regulated secretion. The PTP activation was transient, SDS-resistant, and localized to the cytoskeleton fraction of cells. The cytoskeletal localization of IAR, a receptor-like PTP associated with secretory granules of neuroendocrine cells, suggested the possibility that IAR is the secretagogue-activated PTP. The transient expression of human IAR in betaTC3 and HIT-T15 beta cells, followed by treatment with secretagogues or control compounds and immunoprecipitation of human IAR, showed that immunoprecipitates from the secretagogue-treated cells contained an elevated PTP activity. The secretagogue-induced activation of IAR had identical kinetics to that of the endogenous PTP. Although ectopic IAR was present in membrane and cytoskeletal fractions from the cells, only the cytoskeleton-associated IAR could be activated. Thus IAR represents the endogenous secretagogue-responsive PTP, or at least a component of it, and is one of the few receptor-like PTPs for which enzymatic activation has been demonstrated. Insulin secretion is detected prior to IAR activation, suggesting that IAR is not required for immediate secretion but likely plays a role in events downstream of insulin secretion or in another pathway related to the specialized function of secretory cells.