The mammalian dual-specificity protein-tyrosine phosphatase VHR (for VH1-related) has been identified as a novel regulator of extracellular regulated kinases (ERKs). To identify potential cellular substrates of VHR, covalently immobilized mutant VHR protein was employed as an affinity trap. A tyrosine-phosphorylated protein(s) of approximately 42 kDa was specifically adsorbed by the affinity column and identified as ERK1 and ERK2. Subsequent kinetic analyses and transfection studies demonstrated that VHR specifically dephosphorylates and inactivates ERK1 and ERK2 in vitro and in vivo. Only the native structure of phosphorylated ERK was recognized by VHR and was inactivated with a second-order rate constant of 40,000 M-1 s-1. VHR was found to dephosphorylate endogenous ERK, but not p38 and JNK. Immunodepletion of endogenous VHR eliminated the dephosphorylation of cellular ERK. Transfection studies in COS-1 cells demonstrated that in vivo phosphorylation of epidermal growth factor-stimulated ERK depended on VHR protein levels. Overexpression above endogenous levels of VHR led to accelerated ERK inactivation, but did not alter the normal activation of ERK. Unique among reported mitogen activated protein kinase phosphatases, VHR is constitutively expressed, localized to the nucleus, and tyrosine-specific. This study is the first to report the identification of authentic substrates of dual-specificity phosphatases utilizing affinity absorbents and is the first to identify a nuclear, constitutively expressed, and tyrosine-specific ERK phosphatase. The data strongly suggest that VHR is responsible for the rapid inactivation of ERK following stimulation and for its repression in quiescent cells.