This study describes the isolation of a putative transmembrane protein tyrosine phosphatase (PTP), mIA-2, from a mouse brain cDNA library. The cDNA encodes 979 amino acids containing a unique extracellular domain and a single intracellular catalytic domain. Expression of mIA-2 was found primarily in the central nervous system and in neuroendocrine cells. The sequence shares a high degree of homology with its human counterpart (92% identity), especially in the intracellular domain, which shows 99.3% identity between the two species. In both human and mouse IA-2, several substitutions were found in the highly conserved regions including an Ala to Asp substitution in the core sequence. Bacterial expression of a glutathione S-transferase fusion protein showed that mIA-2 had no enzyme activity with conventional substrates such as Raytide, myelin basic protein, angiotensin, RR-src and pNpp. When tested with the total tyrosine-phosphorylated cellular proteins isolated on an anti-phosphotyrosine antibody column, it also showed little, if any, enzyme activity. These findings suggest that mIA-2 is a new member of the transmembrane PTP family that either has very narrow substrate specificity perhaps requiring post-translational modification for enzyme activity or has a still unknown biological function.