The proinflammatory cytokine tumor necrosis factor (TNF) modulates cellular responses through the mitogen-activated protein kinase (MAPK) and nuclear factor-kappaB (NF-kappaB) signaling pathways, but the molecular mechanisms underlying MAPK activation are unknown. T cell protein tyrosine phosphatase (TCPTP) is essential for hematopoietic development and negatively regulates inflammatory responses. Using TCPTP-deficient fibroblasts, we show here that TCPTP regulates TNF-induced MAPK but not NF-kappaB signaling. TCPTP interacted with the adaptor protein TRAF2, and dephosphorylated and inactivated Src tyrosine kinases to suppress downstream signaling through extracellular signal-regulated kinases and production of interleukin 6. These results link TCPTP and Src tyrosine kinases to the selective regulation of TNF-induced MAPK signaling and identify a previously unknown mechanism for modulating inflammatory responses mediated by TNF.