p50csk is a tyrosine protein kinase (TPK) that represses the activity of Src family TPKs. We previously showed that Csk is a potent negative regulator of antigen receptor signaling in T lymphocytes and that its Src homology (SH) 3 and SH2 domains are required to inhibit these signals. To test the idea that the Csk SH3 and SH2 domains mediate interactions with other cellular proteins, we attempted to identify Csk-associated polypeptides using the yeast two-hybrid system. The results of our experiments demonstrated that Csk physically associates with PEP, a protein tyrosine phosphatase (PTP) expressed in hemopoietic cells. Further analyses revealed that this interaction was mediated by the Csk SH3 domain and by a proline-rich region (PPPLPERTP) in the non-catalytic C-terminal portion of PEP. The association between Csk and PEP was documented in transiently transfected Cos-1 cells and in a variety of cells of hemopoietic lineages, including T cells. Additional analyses demonstrated that the association between Csk and PEP is highly specific. Together, these data indicated that PEP may be an effector and/or a regulator of p50csk in T cells and other hemopoietic cells. Moreover, they allowed the identification of PEP as the first known ligand for the Csk SH3 domain.