The transmembrane and intracellular protein tyrosine phosphatases (PTPs) play an essential role as signal transduction proteins involved in various cellular processes including division, proliferation and differentiation. As such, their activity must be strictly regulated to avoid nonspecific tyrosine dephosphorylation of cellular proteins. The intracellular PTPs possess a diversity of protein sequences outside the catalytic domain that appear to serve as 'zip codes' specifically 'addressing' these proteins to defined subcellular compartments. These localization strategies are proposed to function as a regulatory mechanism, defining the substrate specificity and function of the intracellular PTPs.