A putative low molecular weight protein tyrosine phosphatase (LMW-PTP) was identified in the genome sequence of the bacterial pathogen, Campylobacter jejuni. This novel gene, cj1258, has sequence homology with a distinctive class of phosphatases widely distributed among prokaryotes and eukaryotes. We report here the solution structure of Cj1258 established by high-resolution NMR spectroscopy using NOE-derived distance restraints, hydrogen bond data, and torsion angle restraints. The three-dimensional structure consists of a central four-stranded parallel beta-sheet flanked by five alpha-helices, revealing an overall structural topology similar to those of the eukaryotic LMW-PTPs, such as human HCPTP-A, bovine BPTP, and Saccharomyces cerevisiae LTP1, and to those of the bacterial LMW-PTPs MPtpA from Mycobacterium tuberculosis and YwlE from Bacillus subtilis. The active site of the enzyme is flexible in solution and readily adapts to the binding of ligands, such as the phosphate ion. An NMR-based screen was carried out against a number of potential inhibitors and activators, including phosphonomethylphenylalanine, derivatives of the cinnamic acid, 2-hydroxy-5-nitrobenzaldehyde, cinnamaldehyde, adenine, and hypoxanthine. Despite its bacterial origin, both the three-dimensional structure and ligand-binding properties of Cj1258 suggest that this novel phosphatase may have functional roles close to those of eukaryotic and mammalian tyrosine phosphatases. The three-dimensional structure along with mapping of small-molecule binding will be discussed in the context of developing high-affinity inhibitors of this novel LMW-PTP.