The SHPTP1 protein tyrosine phosphatase is activated by the c-Abl and Lyn tyrosine kinases in the cellular response to genotoxic stress. However, signaling mechanisms involved in the negative regulation of SHPTP1 are unknown. This study demonstrates that protein kinase C delta (PKCdelta) associates with SHPTP1. The PKCdelta catalytic domain binds directly to SHPTP1. The results also demonstrate that PKCdelta is required, at least in part, for phosphorylation and inactivation of SHPTP1. The phosphatase activity of SHPTP1 was attenuated by coincubation with PKCdelta in vitro. In addition, treatment of U-937 human myeloid leukemia cells with 1-beta-D-arabinofuranosylcytosine (ara-C) was associated with induction of the PKCdelta kinase function and inhibition of SHPTP1 activity. Down-regulation of SHPTP1 by ara-C was blocked by the PKCdelta inhibitor rottlerin but not by the PKCalpha and -beta inhibitor Gö6976. Moreover, transient coexpression studies with a dominant-negative mutant of PKCdelta demonstrate that the kinase activity of PKCdelta is required for the down-regulation of SHPTP1. These findings support the functional interaction between PKCdelta and SHPTP1 in the cellular response to DNA damage.