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 Km 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.