Receptor protein-tyrosine phosphatase alpha (RPTP alpha) is a transmembrane protein with a short extracellular domain (123 amino acids) and two cytoplasmically localized protein-tyrosine phosphatase (PTP) domains. Here we report that RPTP alpha is constitutively phosphorylated on tyrosine in NIH 3T3 mouse fibroblasts. The in vivo tyrosine phosphorylation site was localized to the C-terminus of RPTP alpha by phosphopeptide mapping experiments using in vivo and in vitro 32P-labeled RPTP alpha. The identity of this site as Tyr789, located five residues from the C-terminus, was confirmed by site-directed mutagenesis. Transient overexpression of c-Src together with RPTP alpha in human embryonic kidney 293 cells increased phosphorylation of Tyr789, suggesting that c-Src may phosphorylate RPTP alpha in vivo. RPTP alpha had autodephosphorylation activity in vitro. When expressed in 293 cells the level of Tyr789 phosphorylation was higher in a non-functional mutant of RPTP alpha than in wild type RPTP alpha, indicating that RPTP alpha may have autodephosphorylation activity in vivo as well. The sequence on the C-terminal side of Tyr789 (YANF) fits the consensus binding site for the SH3-SH2-SH3 adaptor protein GRB2 (YXNX). We show that RPTP alpha, but not a mutant of RPTP alpha with a Tyr-->Phe mutation at position 789, bound to GRB2 in vitro. In addition, RPTP alpha co-immunoprecipitated with GRB2 from NIH 3T3 cells, demonstrating that GRB2 bound to RPTP alpha in vivo. The guanine nucleotide releasing factor for the Ras GTPase, Son of sevenless (Sos), which associates with GRB2 via its SH3 domains, was not detected in RPTP alpha immunoprecipitates. Our results suggest a role for RPTP alpha in attenuation of GRB2-mediated signaling.