Thiophosphotyrosyl protein and peptide substrate analogs were found to be potent and specific protein-tyrosine phosphatase inhibitors with IC50s in the range of 0.2-30 microM. The analogs were based on highly reactive substrates and included thiophosphotyrosyl forms of reduced carboxamidomethylated and maleylated lysozyme and peptides based on tyrosine phosphorylation sites of lysozyme, alpha s2-casein, and platelet-derived growth factor receptor. These analogs inhibited protein-tyrosine phosphatases from both the intracellular and transmembrane classes and from a variety of species ranging from a prokaryote (Yersinia enterolitica) to man. The extent of inhibition of phosphatase activity by a given analog varied with the phosphatase species. In contrast, protein kinases and protein-serine/threonine phosphatases were not significantly affected by these analogs. The mechanism of inhibition was investigated using rat brain protein-tyrosine phosphatase-1 as a prototype. These studies indicated that the inhibition was rapid and reversible and was competitive in nature. The Ki for inhibition by various thiophosphotyrosyl analogs was generally proportional to the apparent Km for the corresponding phosphorylated substrates. Unphosphorylated substrate molecules were generally much weaker inhibitors than the corresponding thiophosphotyrosyl substrate analogs. Taken together these results point to an active site-directed mechanism for inhibition. These specific inhibitory probes could be used to study substrate binding mechanisms as well as physiological roles of various protein-tyrosine phosphatases.