Beta-arrestins turn off G protein-mediated signals and initiate distinct G protein-independent signaling pathways. We previously demonstrated that angiotensin AT(1) receptor-bound beta-arrestin 1 is cleaved after Phe(388) upon angiotensin II stimulation. The mechanism and signaling pathway of angiotensin II-induced beta-arrestin cleavage remain largely unknown. Here, we show that protein Tyr phosphatase activity is involved in the regulation of beta-arrestin 1 cleavage. Tagging of green fluorescent protein (GFP) either to the N-terminus or C-terminus of beta-arrestin 1 induced conformational changes and the cleavage of beta-arrestin 1 without angiotensin AT(1) receptor activation. Orthovanadate and molybdate, inhibitors of protein Tyr phosphatase, attenuated the cleavage of C-terminal GFP-tagged beta-arrestin 1 in vitro. The inhibitory effects of okadaic acid and pyrophosphate, which are inhibitors of protein Ser/Thr phosphatase, were less than those of protein Tyr phosphatase inhibitors. Cell-permeable pervanadate inhibited angiotensin II-induced cleavage of beta-arrestin 1 in COS-1 cells. Our findings suggest that Tyr phosphorylation signaling is involved in the regulation of angiotensin II-induced beta-arrestin cleavage.