MAP kinase phosphatase 3 (MKP3) is a protein tyrosine phosphatase (PTP) for which in vivo evidence suggests that regulation can occur by oxidation and/or reduction of the active site cysteine. Using kinetics and mass spectrometry, we have probed the biochemical details of oxidation of the active site cysteine in MKP3, with particular focus on the mechanism of protection from irreversible inactivation to the sulfinic or sulfonic acid species. Like other PTPs, MKP3 was found to be rapidly and reversibly inactivated by mild treatment with hydrogen peroxide. We demonstrate that unlike the case for some PTPs, the sulfenic acid of the active site cysteine in MKP3 is not stabilized in the active site but instead is rapidly trapped in a re-reducible form. Unlike the case for other PTPs, the sulfenic acid in MKP3 does not form a sulfenyl-amide species with its neighboring residue or a disulfide with a single proximate cysteine. Instead, multiple cysteines distributed in both the N-terminal substrate-binding domain (Cys147 in particular) and the C-terminal catalytic domain (Cys218) are capable of rapidly and efficiently trapping the sulfenic acid as a disulfide. Our results extend the diversity of mechanisms utilized by PTPs to prevent irreversible oxidation of their active sites and expand the role of the N-terminal substrate recognition domain in MKP3 to include redox regulation.