src homology 2 (SH2) domains direct binding to specific phosphotyrosyl proteins. Recently, SH2-containing protein-tyrosine-phosphatases (PTPs) were identified. Using degenerate oligonucleotides and the PCR, we have cloned a cDNA for an additional PTP, SH-PTP2, which contains two SH2 domains and is expressed ubiquitously. When expressed in Escherichia coli, SH-PTP2 displays tyrosine-specific phosphatase activity. Strong sequence similarity between SH-PTP2 and the Drosophila gene corkscrew (csw) and their similar patterns of expression suggest that SH-PTP2 is the human corkscrew homolog. Sequence comparisons between SH-PTP2, SH-PTP1, corkscrew, and other SH2-containing proteins suggest the existence of a subfamily of SH2 domains found specifically in PTPs, whereas comparison of the PTP domains of the SH2-containing PTPs with other tyrosine phosphatases suggests the existence of a subfamily of PTPs containing SH2 domains. Since corkscrew, a member of the terminal class signal transduction pathway, acts in concert with D-raf to positively transduce the signal generated by the receptor tyrosine kinase torso, these findings suggest several mechanisms by which SH-PTP2 may participate in mammalian signal transduction.