The Schizosaccharomyces pombe genes pyp1(+) and pyp2(+) encode protein tyrosine phosphatases (PTPases) that act as negative regulators of mitosis upstream of the wee1(+)/mik1(+) pathway. Here we provide evidence that pyp1(+) and pyp2(+) function independently of cdr1(+)(nim1(+)) in the inhibition of mitosis and that the wee1 kinase is not a direct substrate of either PTPase. In a pyp1::ura4 cdc25-22 genetic background, overexpression of either the N-terminal domain of pyp1(+) or a catalytically inactive mutant,pyp1C470S, causes cell cycle arrest. This phenotype reverses the suppression of a cdc25 temperature-sensitive mutation at 35 degrees C caused by a pyp1 disruption. Furthermore, pyp1C470S and a catalytically inactive mutant of pyp2, pyp2C630S, induce mitotic delay as do their wild-type counterparts. Analysis of pyp1(+) and pyp2(+) further reveals that the in vitro PTPase activity of pyp1 and pyp2, as well as their biological activity, is dependent on the presence of N-terminal sequences that are not normally considered part of PTPase catalytic domains.