Sequences encoding proteins with homology to protein tyrosine phosphatases have been identified in Arabidopsis, soybean and pea. Each contains a predicted catalytic domain containing sequence motifs characteristic of tyrosine-specific protein phosphatases (PTPs) which play an important role in signal transduction in other eukaryotes and are distinct from dual-specificity, cdc25 or low-molecular-weight protein tyrosine phosphatases. Their identity as PTPs was confirmed by characterising the soybean PTP expressed as a recombinant His-tagged fusion protein. The enzyme had phosphatase activity towards p-nitrophenolphosphate (pNPP) and phosphotyrosine, but did not hydrolyse phosphoserine or phosphothreonine at a measureable rate. Phosphotyrosine containing peptides also served as substrates, with K-m values in the micromolar range. Activity was abolished by inhibitors specific for tyrosine phosphatases (vanadate, dephostatin) but was unaffected by inhibitors of serine/threonine protein phosphatases (fluoride, cantharidin, metal-chelating agents). Gel filtration chromatography showed that the recombinant enzyme was a monomer. The Arabidopsis PTP sequence was isolated both as a genomic clone and as a partial EST, whereas the pea and soybean sequences were isolated as cDNAs. Southern analysis suggested a single gene in Arabidopsis and a small gene family in pea and soybean. In pea, PTP transcripts were present in embryos, and decreased in level with development; transcripts were also detectable in other tissues. The plant PTPs all contain a similar N-terminal domain which shows no similarity to any known protein sequence. This domain may be involved in PTP functions unique to plants.