A protein-tyrosine-phosphatase (PTPase; EC 184.108.40.206) containing two Src homology 2 (SH2) domains, SHPTP1, was previously identified in hematopoietic and epithelial cells. By placing the coding sequence of the PTPase behind a bacteriophage T7 promoter, we have overexpressed both the full-length enzyme and a truncated PTPase domain in Escherichia coli. In each case, the soluble enzyme was expressed at levels of 3-4% of total soluble E. coli protein. The recombinant proteins had molecular weights of 63,000 and 45,000 for the full-length protein and the truncated PTPase domain, respectively, as determined by SDS/PAGE. The recombinant enzymes dephosphorylated p-nitrophenyl phosphate, phosphotyrosine, and phosphotyrosyl peptides but not phosphoserine, phosphothreonine, or phosphoseryl peptides. The enzymes showed a strong dependence on pH and ionic strength for their activity, with pH optima of 5.5 and 6.3 for the full-length enzyme and the catalytic domain, respectively, and an optimal NaCl concentration of 250-300 mM. The recombinant PTPases had high Km values for p-nitrophenyl phosphate and exhibited non-Michaelis-Menten kinetics for phosphotyrosyl peptides.