The receptor protein-tyrosine phosphatase (PTP) DEP-1 (CD148/PTP-eta) has been implicated in the regulation of cell growth, differentiation, and transformation, and most recently has been identified as a potential tumor suppressor gene mutated in colon, lung, and breast cancers. We have generated constructs comprising the cytoplasmic segment of DEP-1 fused to the maltose-binding protein to identify potential substrates and thereby suggest a physiological function for DEP-1. We have shown that the substrate-trapping mutant form of DEP-1 interacted with a small subset of tyrosine-phosphorylated proteins from lysates of the human breast tumor cell lines MDA-MB-231, T-47D, and T-47D/Met and have identified the hepatocyte growth factor/scatter factor receptor Met, the adapter protein Gab1, and the junctional component p120 catenin as potential substrates. Following ligand stimulation, phosphorylation of specific tyrosyl residues in Met induces mitogenic, motogenic, and morphogenic responses. When co-expressed in 293 cells, the full-length substrate-trapping mutant form of DEP-1 formed a stable complex with the chimeric receptor colony stimulating factor 1 (CSF)-Met and wild type DEP-1 dephosphorylated CSF-Met. Furthermore, we observed that DEP-1 preferentially dephosphorylated a Gab1 binding site (Tyr(1349)) and a COOH-terminal tyrosine implicated in morphogenesis (Tyr(1365)), whereas tyrosine residues in the activation loop of Met (Tyr(1230), Tyr(1234), and Tyr(1235)) were not preferred targets of the PTP. The ability of DEP-1 preferentially to dephosphorylate particular tyrosine residues that are required for Met-induced signaling suggests that DEP-1 may function in controlling the specificity of signals induced by this PTK, rather than as a simple "off-switch" to counteract PTK activity.