A DNA fragment that caused pigment production in Streptomyces lividans was isolated from a gene library of PstI-digested chromosomal fragments of S. coelicolor A3(2). Subcloning and nucleotide sequencing proved the identity of the cloned gene to ptpA encoding a low-molecular-mass phosphotyrosine protein phosphatase. The S. lividans transformant containing ptpA on pIJ41 with a copy number of 3 4 per genome produced large amounts of undecylprodigiosin and A-factor, in addition to the pigmented antibiotic actinorhodin, whereas the transformant containing ptpA on an SCP2* derivative with a copy number of 1-2 did not. The PtpA protein produced as a fusion to the maltose binding protein in Escherichia coli showed phosphatase activity toward o-phosphotyrosine, but not toward o-phosphoserine or a-threonine. Introduction of a mutant ptpA gene encoding an inactive protein with serine instead of the 9th cysteine caused no pigmentation. Disruption of the chromosomal ptpA gene of S. coelicolor A3(2), however, appeared to cause no detectable effect on the production of the pigmented antibiotics or A-factor and the ptpA disruptants developed aerial mycelium and spores normally.