An osteoclastic protein-tyrosine phosphatase (PTP-oc), essential for osteoclast activity, shows sequence identity with the intracellular domain of GLEPP1, a renal receptor-like transmembrane PTP. PTP-oc has been assumed to be a truncated variant of GLEPP1, resulting from alternative splicing. However, the 5'-untranslated region sequence of PTP-oc mRNA contains 217 bp from an intron of GLEPP1. There are no splicing acceptor sites at the PTP-oc transcription site. The intronic sequence flanking the 5' end of the PTP-oc transcription start site contains potential promoter elements essential for transcriptional initiation. To test the hypothesis that the PTP-oc gene has an alternative, tissue-specific, intronic promoter, the promoter activity of a 1.3-kb PCR fragment covering the 5'-flanking region of the PTP-oc gene was measured. The putative PTP-oc promoter fragment showed strong promoter activity in U937 cells. Mutation of the putative TATA box within the PTP-oc promoter abolished 60-90% of its promoter activity. The PTP-oc promoter fragment showed strong promoter activity in cells that express PTP-oc (U937 cells and RAW264.7 cells) but not in cells that do not express the enzyme (skin fibroblasts, TE85 cells, and HEK293 cells). These findings strongly support the conclusion that the 1.3-kb intronic fragment contains the tissue-specific, PTP-oc proximal promoter. Deletion and functional analyses indicate that the proximal 5' sequence flanking the TATA box of the PTP-oc contains potential repressor elements. The removal of the putative repressor elements led to the apparent loss of tissue specificity. In summary, we conclude that an intronic promoter within the GLEPP1 gene drives the expression of the PTP-oc in a cell type-specific manner. This GLEPP1/PTP-oc gene system is one of the very few systems in which two important tissue-specific enzymes are derived from the same gene by the use of alternative intronic promoters.