PTP20, also known as HSCF/protein-tyrosine phosphatase K1/fetal liver phosphatase 1/brain-derived phosphatase 1, is a cytosolic protein-tyrosine phosphatase with currently unknown biological relevance. We have identified that the nonreceptor protein-tyrosine kinase Tec-phosphorylated PTP20 on tyrosines and co-immunoprecipitated with the phosphatase in a phosphotyrosine-dependent manner. The interaction between the two proteins involved the Tec SH2 domain and the C-terminal tyrosine residues Tyr-281, Tyr-303, Tyr-354, and Tyr-381 of PTP20, which were also necessary for tyrosine phosphorylation/dephosphorylation. Association between endogenous PTP20 and Tec was also tyrosine phosphorylation-dependent in the immature B cell line Ramos. Finally, the Tyr-281 residue of PTP20 was shown to be critical for deactivating Tec in Ramos cells upon B cell receptor ligation as well as dephosphorylation and deactivation of Tec and PTP20 itself in transfected COS7 cells. Taken together, PTP20 appears to play a negative role in Tec-mediated signaling, and Tec-PTP20 interaction might represent a negative feedback mechanism.