Protein tyrosine kinases and phosphatases play important roles in the regulation of cell growth, development, and differentiation. We report here the identification in Trypanosoma cruzi of a gene (TcPRL-1) encoding a protein tyrosine phosphatase. The predicted protein (TcPRL-1) shares ca. 35% identity with the mammalian protein tyrosine phosphatase known as phosphatase of regenerating liver 1 (PRL-1). Four copies of this protein tyrosine phosphatase are present in the T. cruzi genome, and Northern blot assays showed a transcript of approximately 750 bases. TcPRL-1 was detected by Western blot analysis only in amastigote extracts as a 21-kDa protein. TcPRL-1 was expressed in Escherichia coli, and its phosphatase activity was determined by using p-nitrophenylphosphate and a phosphorylated protein as substrates. In contrast to other PRLs, TcPRL-1 activity was not affected by pentamidine, and it was inhibited by very low concentrations of o-vanadate. TcPRL-1 has a C-terminal CAAX motif (CAVM) and is farnesylated in vitro by T. cruzi epimastigote extracts and in vivo according to the transfection results. After transfection of T. cruzi with a vector that expresses TcPRL-1 as a C-terminal fusion to green fluorescent protein, GFP-TcPRL-1 was detected in the endocytic pathway of epimastigotes, amastigotes, and trypomastigotes by colocalization with cruzipain and concanavalin A. Interestingly, a mutant form without the CAAX motif localized to the cytoplasm, in contrast to its mammalian counterparts that localize to the nucleus. The results of these studies on TcPRL-1 reveal that, even though the animal and parasite PRLs share similar kinetic properties, their susceptibilities to inhibitors, as well as their localization, are distinct, implying that they may be involved in different cellular processes.