YopH is a 468-amino acid protein-tyrosine phosphatase that is produced by pathogenic Yersinia species. YopH is translocated into host mammalian cells via a type III protein secretion system. Translocation of YopH into human epithelial cells results in dephosphorylation of p130(Cas) and paxillin, disruption of focal adhesions, and inhibition of integrin-mediated bacterial phagocytosis. Previous studies have shown that the N-terminal 129 amino acids of YopH comprise a bifunctional domain. This domain binds to the SycH chaperone in Yersinia to orchestrate translocation and to tyrosine-phosphorylated target proteins in host cells to mediate substrate recognition. We used random mutagenesis in combination with the yeast two-hybrid system to identify residues in the YopH N-terminal domain that are involved in substrate-binding activity. Four single codon changes (Q11R, V31G, A33D, and N34D) were identified that interfered with binding of the YopH N-terminal domain to tyrosine-phosphorylated p130(Cas) but not to SycH. These mutations did not impair YopH translocation into HeLa cells infected with Yersinia pseudotuberculosis. Introduction of the V31G substitution into catalytically inactive (substrate-trapping) forms of YopH interfered with the ability of these proteins to bind to p130(Cas) and to localize to focal adhesions in HeLa cells. In addition, the V31G substitution reduced the ability of catalytically active YopH to dephosphorylate target proteins in HeLa cells. These data indicate that the substrate- and SycH-binding activities of the YopH N-terminal domain can be separated and that the former activity is important for recognition and dephosphorylation of substrates by YopH in vivo.