PTP1C is a non-transmembrane-type protein-tyrosine phosphatase and contains two Src homology-2 (SH2) domains. PTP1C was tyrosine-phosphorylated in SR-3Y1, a v-Src-transformed rat fibroblast cell line. Tyrosine phosphorylation of PTP1C was more prominent when PTP1C was overexpressed in SR-3Y1 cells. PTP1C lacking SH2 domains was also tyrosine-phosphorylated in SR-3Y1 cells, indicating that SH2 domains of PTP1C are not required for tyrosine phosphorylation of PTP1C by v-Src kinase. V-Src kinase catalyzed the phosphorylation of PTP1C in a cell-free system. The growth rate of SR-3Y1 was reduced by the expression of PTP1C in the low-serum medium. Furthermore, overexpression of PTP1C suppressed the anchorage-independent colony formation of SR-3Y1 cells. These results suggest that PTP1C is a direct target for v-Src kinase and may down-regulate the proliferation of cells.