In response to PMA treatment K562 myelogenous leukemia cells undergo megakaryocytic differentiation, which is dependent on prolonged ERK activation and is characterized by growth arrest, upregulation of CD41 and IL-6, and, finally, by characteristic changes in cell morphology. The tyrosine phosphatase HePTP was recently demonstrated to regulate ERK activity and changes in HePTP expression have been associated with hematopoietic malignancies. Here, we have studied the function of HePTP during PMA-induced megakaryocytic differentiation of K562 cells. Overexpression of HePTP or inhibition of HePTP expression with antisense cDNA had no effect on PMA-induced cell cycle arrest or upregulation of cyclin D in K562 cells. The expression of megakaryocytic markers such as CD41 and IL6, however, were highly reduced in cells overexpressing HePTP, due to reduced ERK activation, and the cells were impaired in their ability to differentiate. Compared to control cells, HePTP antisense expressing cells did not show increased basal or PMA-induced ERK activity. However, antisense inhibition of HePTP enhanced nuclear translocation of ERK and the expression of the megakaryocytic markers CD41 and IL-6. Interestingly, like cells overexpressing HePTP, morphological differentiation was also impaired in HePTP antisense expressing cells. The results for the first time demonstrate that different aspects of megakaryocytic differentiation have distinct requirements for ERK activity. They further show that HePTP is involved in the regulation of nuclear translocation of ERK2 and that HePTP protein levels can modulate K562 cell differentiation.