Protein tyrosine phosphatases (PTPases) share a number of conserved amino acid residues, including the active site sequence HCXXGXXRS(T), which are strongly implicated in catalysis. The roles of two conserved active site residues, Asp-181 and Ser-222, were investigated using a combination of site-directed mutagenesis and kinetic analysis in the mammalian PTPase PTP1. The pH profiles for k(cat)/K(m) and k(cat) of the wild-type enzyme indicate that two ionizable groups, of pK(a) values 5.1 and 5.44, must be deprotonated and one group with a pK(a) value of 4.93 must be protonated for maximal activity. The group of pK(a) value 5.1 is the second ionization of the substrate phosphate moiety. Selective thiolate anion inactivation indicates the residue with pK(a) value of 5.44 is C215. The pH-dependent profiles of the D181N mutant during establish the residue with pK(a) value of 4.93 to be Asp-181 and suggest that it functions as a general acid phosphoryl transfer to the enzyme. Rapid reaction kinetics of wild-type and D181N mutant enzymes indicate that the formation of the phospho-enzyme intermediate is rate-limiting at pH 7.0 and 30 degrees C. Enzymes containing the S222A mutation exhibited rapid reaction burst kinetics, strongly suggesting that phospho-enzyme intermediate hydrolysis is fully rate-limiting. The role of the active site S222 is to accelerate the rate of phospho-enzyme intermediate hydrolysis. The kinetic analysis of a third mutant, containing both the D181N and S222A mutations, suggests that D181 also serves as a general base in the breakdown of the phospho-enzyme intermediate.