Phospho-tyrosine levels are increased in melanoma, apparently consistent with reports of elevated protein tyrosine kinase activity. Some protein tyrosine kinases are encoded by oncogenes and have been implicated in melanoma genesis. Decreased protein tyrosine phosphatase activity may also increase phospho-tyrosine. Protein tyrosine phosphatase genes are candidate tumor suppressors and loss of expression may contribute to melanoma genesis. Here we survey protein tyrosine phosphatase expression in pigment cells. Protein tyrosine phosphatase genes were cloned by reverse transcriptase polymerase chain reaction using degenerate primers based upon conserved sequences within the phosphatase catalytic domain. Reaction products were cloned and sequenced: 118 and 113 partial protein tyrosine phosphatase products were isolated from normal melanocytes and melanoma cells, respectively. Northern blotting analysis was used to study expression of 15 protein tyrosine phosphatase genes. Expression of PTP-kappa and PTP-pi was absent or downregulated in more than 20% of melanoma cell lines and in some unmanipulated melanoma biopsies. These closely related enzymes are members of the 2B receptor protein tyrosine phosphatase family previously implicated in contact inhibition. Loss of protein tyrosine phosphatase expression may contribute to the abnormal tyrosine phosphorylation seen in melanoma; these genes are candidate tumor suppressors.