A sensitive RT-PCR display technique was used to examine the expression of protein tyrosine phosphatases (PTPs) during the differentiation of mouse embryonic stem (ES) cells. The majority of PTPs are expressed constitutively but one is present only in undifferentiated ES cells. This PTP was cloned and named ES cell phosphatase (ESP). ESP mRNA is detectable in oocytes and throughout early mouse embryo development. At early egg cylinder stages, transcripts are localised in the pluripotential epiblast. As gastrulation commences, however, epiblast expression is lost. Transcripts are present transiently in newly formed embryonic mesoderm. These data suggest that this transmembrane signaling molecule is associated with developmental lability in early embryogenesis.