Protein phosphatase activity specific for Tyr(P) (phosphotyrosine) residues (PTP-phosphatase) was found in the cytosol and particulate fractions of human placenta. In the particulate fraction, half of the PTP-phosphatase activity could be extracted with 1% Triton X-100. The PTP-phosphatase remaining in the Triton-insoluble residue was solubilized with 0.6 M-KCl plus 1% CHAPS (3-[(3-cholamidopropyl)-dimethylammonio]propane-1-sulphonate) and was purified 1850-fold by adsorption to DEAE-Sepharose, affinity chromatography on Zn2+-iminodiacetate-agarose, phosphocellulose adsorption, Fractogel filtration and Mono Q chromatography. The cytoskeleton-associated PTP-phosphatase was distinguished from acid, alkaline and other protein Ser(P) (phosphoserine)/Thr(P) (phosphothreonine) phosphatases by its neutral pH optimum, activity in the presence of EDTA, inhibition by Zn2+, vanadate, or molybdate, and low activity with either [Ser(P)]phosphorylase a or p-nitrophenyl phosphate. The PTP-phosphate displayed a Km of 0.15 microM with [Tyr(P)]serum albumin as substrate, 10-100-fold lower than the Km for previously described protein phosphatases. The cytoskeleton-associated PTP-phosphatase catalysed the dephosphorylation of receptors for insulin, insulin-like growth factor-1 and epidermal growth factor labelled by autophosphorylation. The properties of this PTP-phosphatase suggest that it plays a role in the regulation of hormone receptors and cytoskeleton proteins by reversible phosphorylation on tyrosine residues.