In this study, we describe the isolation, expression, and characterization of a new member of the transmembrane protein tyrosine phosphatase family from human brain, designated IA-2 beta. The 3853-bp cDNA encodes 986 amino acids with a molecular mass of 108,044 daltons (a predicted pI value of 5.8). The intracellular domain of human IA-2 beta is 74% identical to human IA-2. Northern blot analysis showed that IA-2 beta cDNA recognized two transcripts (approximately 5.0 kb and 4.0 kb) in four of five human insulinomas, one glucagonoma, and in normal human brain, pituitary, and pancreas, but not in a variety of other normal tissues. Rabbit antiserum, raised against the intracellular domain of IA-2 beta, reacted with pancreatic islets. Treatment of in vitro-translated full-length IA-2 beta protein with trypsin converted it into a 37-kD fragment. Using recombinant human IA-2 beta, we developed a radioimmunoprecipitation assay to measure autoantibodies in the sera of patients with insulin-dependent diabetes mellitus (IDDM). Seventy-six new-onset IDDM patients were tested. Thirty-seven percent (28 of 76) of the IDDM sera-but less than 1% of the control sera (1 of 174)-reacted with IA-2 beta. The same IDDM sera tested for autoantibodies to IA-2 and glutamic acid decarboxylase (GAD65) showed that 64% (49 of 76) and 57% (43 of 76), respectively, were positive. All but two of the IA-2 beta autoantibody-positive sera also reacted with IA-2, supporting the close sequence similarity between the two molecules. Combination of any two markers, such as IA-2 beta and IA-2, or IA-2 beta and GAD65, or IA-2 and GAD65, revealed that 67%, 74%, and 87% of IDDM sera were positive for autoantibodies, respectively. Blocking of IDDM sera with recombinant IA-2, IA-2 beta, or GAD65 resulted in marked inhibition of reactivity of IDDM sera with pancreatic islet sections as measured by islet cell autoantibody immunofluorescence. This result suggests that these three autoantigens are the major targets of islet-cell autoantibody reactivity.