The transmembrane protein-tyrosine-phosphatases (PTPases) LAR, PTP delta, and PTP sigma each contain two intracellular PTPase domains and an extracellular region consisting of Ig-like and fibronectin type III-like domains. We describe the cloning and characterization of human PTP sigma (HPTP sigma) and compare the structure, alternative splicing, tissue distribution, and PTPase activity of LAR, HPTP delta, and HPTP sigma, as well their ability to associate with the intracellular coiled-coil LAR-interacting protein LIP.1. Overall, these three PTPases are structurally very similar, sharing 64% amino acid identity. Multiple isoforms of LAR, HPTP delta, and HPTP sigma appear to be generated by tissue-specific alternative splicing of up to four mini-exon segments that encode peptides of 4-16 aa located in both the extracellular and intracellular regions. Alternative usage of these peptides varies depending on the tissue mRNA analyzed. Short isoforms of both HPTP sigma and HPTP delta were also detected that contain only four of the eight fibronectin type III-like domains. Northern blot analysis indicates that LAR and HPTP sigma are broadly distributed whereas HPTP delta expression is largely restricted to brain, as is the short HPTP sigma isoform containing only four fibronectin type III-like domains. LAR, HPTP delta, and HPTP sigma exhibit similar in vitro PTPase activities and all three interact with LIP.1, which has been postulated to recruit LAR to focal adhesions. Thus, these closely related PTPases may perform similar functions in various tissues.