Protein tyrosine phosphatase (PTP)σ (PTPRS) was shown previously to be associated with susceptibility to inflammatory bowel disease (IBD). PTPσ(-/-) mice exhibit an IBD-like phenotype in the intestine and show increased susceptibility to acute models of murine colitis. However, the function of PTPσ in the intestine is uncharacterized. Here, we show an intestinal epithelial barrier defect in the PTPσ(-/-) mouse, demonstrated by a decrease in transepithelial resistance and a leaky intestinal epithelium that was determined by in vivo tracer analysis. Increased tyrosine phosphorylation was observed at the plasma membrane of epithelial cells lining the crypts of the small bowel and colon of the PTPσ(-/-) mouse, suggesting the presence of PTPσ substrates in these regions. Using mass spectrometry, we identified several putative PTPσ intestinal substrates that were hyper-tyrosine-phosphorylated in the PTPσ(-/-) mice relative to wild type. Among these were proteins that form or regulate the apical junction complex, including ezrin. We show that ezrin binds to and is dephosphorylated by PTPσ in vitro, suggesting it is a direct PTPσ substrate, and identified ezrin-Y353/Y145 as important sites targeted by PTPσ. Moreover, subcellular localization of the ezrin phosphomimetic Y353E or Y145 mutants were disrupted in colonic Caco-2 cells, similar to ezrin mislocalization in the colon of PTPσ(-/-) mice following induction of colitis. Our results suggest that PTPσ is a positive regulator of intestinal epithelial barrier, which mediates its effects by modulating epithelial cell adhesion through targeting of apical junction complex-associated proteins (including ezrin), a process impaired in IBD.