We investigated the molecular and cellular actions of receptor protein tyrosine phosphatase (PTP) alpha in integrin signaling using immortalized fibroblasts derived from wild-type and PTP alpha-deficient mouse embryos. Defects in PTP alpha-/- migration in a wound healing assay were associated with altered cell shape and focal adhesion kinase (FAK) phosphorylation. The reduced haptotaxis to fibronectin (FN) of PTP alpha-/- cells was increased by expression of active (but not inactive) PTP alpha. Integrin-mediated formation of src-FAK and fyn-FAK complexes was reduced or abolished in PTP alpha-/- cells on FN, concomitant with markedly reduced phosphorylation of FAK at Tyr397. Reintroduction of active (but not inactive) PTP alpha restored FAK Tyr-397 phosphorylation. FN-induced cytoskeletal rearrangement was retarded in PTP alpha-/- cells, with delayed filamentous actin stress fiber assembly and focal adhesion formation. This mimicked the effects of treating wild-type fibroblasts with the src family protein tyrosine kinase (Src-PTK) inhibitor PP2. These results, together with the reduced src/fyn tyrosine kinase activity in PTP alpha-/- fibroblasts (Ponniah et al., 1999; Su et al., 1999), suggest that PTP alpha functions in integrin signaling and cell migration as an Src-PTK activator. Our paper establishes that PTP alpha is required for early integrin-proximal events, acting upstream of FAK to affect the timely and efficient phosphorylation of FAK Tyr-397.