Fibroblast growth factor receptor (class IV) shares a certain degree of similarity with class III members like platelet-derived growth factor and macrophage-colony-stimulating factor receptors, which, once activated, are substrates of low M(r) phosphotyrosine protein phosphatase. Up until now no phosphotyrosine phosphatase has been shown to act on this receptor in vivo. Here we demonstrate that low M(r) phosphotyrosine protein phosphatase is able to reduce receptor tyrosine phosphorylation and cell proliferation in response to basic fibroblast growth factor. Contrary to what was previously observed for platelet-derived growth factor, during cell stimulation with basic fibroblast growth factor, no enzyme redistribution among cellular compartments is observed.