The pivotal role of tyrosine kinases in signal transduction is well established, but the role of tyrosine phosphatases remains obscure. The discovery of src homology 2 domain-containing protein tyrosine phosphatases suggested roles for these molecules in growth factor signaling pathways, since src homology 2 domains direct association of downstream signaling molecules with activated growth factor receptors and other phosphotyrosyl proteins. We have found that SH-PTP2, a putative homologue of Drosophila corkscrew, associates in vivo with the ligand-activated epidermal growth factor and platelet-derived growth factor receptors. The N-terminal src homology 2 domain of SH-PTP2 directly associates with activated receptors. SH-PTP2 itself is a phosphoprotein, and it becomes tyrosyl phosphorylated upon growth factor activation. These findings suggest several possible models for SH-PTP2 signaling.