Receptor protein tyrosine phosphatase beta (RPTP beta) mediates cell-cell and cell-matrix interactions. By searching for intracellular proteins that interact with the cytoplasmic region of this phosphatase using the two-hybrid method, we identified several proteins containing PDZ domains. One of these proteins, MAGI-3, contains a guanylate-kinase-like region, six PDZ and two WW domains. The interaction between RPTP beta and MAGI-3 was confirmed by co-immunoprecipitation and pulldown experiments in transfected cells. Immunofluorescence and immunoelectron microscopy revealed that MAGI-3 is concentrated in specific sites at the plasma membrane and in the nucleus. In epithelial cells, MAGI-3 was localized with ZO-1 and cingulin at tight junctions, whereas in primary cultured astrocytes it was found in E-cadherin-based cell-cell contacts and in focal adhesion sites. Although MAGI-3 itself was not phosphorylated on tyrosine residues, it became associated with tyrosine-phosphorylated proteins following a short treatment of the cells with vanadate. In glioblastoma SF763T cells MAGI-3 was associated with a tyrosine-phosphorylated protein with the apparent molecular weight of 130 kDa, whereas in Caco2 cells it was associated with a 90 kDa protein. Finally, we show that p130 served as a substrate for RPTP beta and that its dephosphorylation required the C-terminal sequence of the phosphatase, which mediated the interaction with MAGI-3. These findings suggest a possible role for MAGI-3 as a scaffolding molecule that links receptor tyrosine phosphatase with its substrates at the plasma membrane.