Abstract: To study the regulation of tyrosine phosphorylation/dephosphorylation in Saccharomyces cerevisiae, a protein tyrosine phosphatase (PTPase) was cloned by the polymerase chain reaction (PCR). Conserved amino acid sequences within the mammalian PTPases were used to design primers which generated a yeast PCR fragment. The sequence of the PCR fragment encodeda protein with homology to the mammalian PTPases. The PCR fragment was used to identify the yeast PTP1 gene which has an open reading frame encodinga 335-amino acid residue protein. This yeast PTPase shows 26% sequence identity to the rat PTPase, although highly conserved residues within the mammalian enzymes are invariant in the yeast protein. The yeast PTP1 is physicallt linked to the 5'-end of a heat shock gene SSB1. This yeast PTP1 gene was expressed in Escherichia coli and obtained in a highly purified form by a single affinity chromatography step. The recombinant yeast PTPase hydrolyzed phosphotyrosine containing substrates approximately 1000 times faster than a phosphoserine containing substrate. Gene disruption of yeast PTP1 has no visible effect on vegetative growth.