Receptor-type protein tyrosine phosphatases (RPTPs) of the R3 subgroup play key roles in the immune, vascular and nervous systems. They are characterised by a large ectodomain comprising multiple FNIII-like repeats, a transmembrane domain, and a single intracellular phosphatase domain. The functional role of the extracellular region has not been clearly defined and potential roles in ligand interaction, dimerization, and regulation of cell-cell contacts have been reported. Here bimolecular fluorescence complementation (BiFC) in live cells was used to examine the molecular basis for the interaction of VE-PTP with VE-cadherin, two proteins involved in endothelial cell contact and maintenance of vascular integrity. The potential of other R3-PTPs to interact with VE-cadherin was also explored using this method. Quantitative BiFC analysis, using a VE-PTP construct expressing only the ectodomain and transmembrane domain, revealed a specific interaction with VE-cadherin, when compared with controls. Controls were sialophorin, an unrelated membrane protein with a large ectodomain, and a membrane anchored C-terminal Venus-YFP fragment, lacking both ectodomain and transmembrane domains. Truncation of the first 16 FNIII-like repeats from the ectodomain of VE-PTP indicated that removal of this region is not sufficient to disrupt the interaction with VE-cadherin, although it occurs predominantly in an intracellular location. A construct with a deletion of only the 17th domain of VE-PTP was, in contrast to previous studies, still able to interact with VE-cadherin, although this also was predominantly intracellular. Other members of the R3-PTP family (DEP-1, GLEPP1 and SAP-1) also exhibited the potential to interact with VE-cadherin. The direct interaction of DEP-1 with VE-cadherin is likely to be of physiological relevance since both proteins are expressed in endothelial cells. Together the data presented in the study suggest a role for both the ectodomain and transmembrane domain of R3-PTPs in interaction with VE-cadherin.