Protein-tyrosine phosphatases (PTPases) form an important class of cell regulatory proteins. We have isolated overlapping cDNA clones that together comprise an 8 kb transcript encoding a novel murine PTPase which is expressed in various organs. Sequence analysis revealed an open reading frame of 2,460 amino acid residues. The predicted protein, PTP-BL, is a large non-transmembrane PTPase that exhibits 80% homology with PTP-BAS, a recently described human PTPase. PTP-BL shares some intriguing sequence homologies with submembranous proteins. It contains a band 4.1-like motif also present in the tumor suppressors neurofibromatosis 2 and expanded, five 80 amino acid repeats also present in the discs-large tumor suppressor, and a single catalytic phosphatase domain. No obvious homologies to other proteins were found for the N-terminal region of the protein other than human PTP-BAS. RNA in situ hybridization experiments show that the PTP-BL gene is expressed in epithelial cells, predominantly in kidney, lung, and skin. These data suggest a cell cortical localization for PTP-BL in epithelial cells and a possible role in the morphology and motility of epithelial tissues.