The noncatalytic domain of a non-receptor-type protein-tyrosine phosphatase (the T-cell phosphatase or PTP-S) isolated from a rat spleen cDNA library shows homology with the basic domains of transcription factors Fos and Jun [Swarup, G., Kamatkar, S., Radha, V., & Rema, V. (1991) FEBS Lett. 280,65-69]. We have expressed this phosphatase in Escherichia coli under the control of T7 promoter. The PTP-S gene product expressed in E. coli shows protein-tyrosine phosphatase activity and binds to DNA at pH 7.4 as determined by DNA affinity chromatography, Southwestern blotting, and gel retardation methods. The carboxy-terminal region of this phosphatase was fused with glutathione S-transferase by constructing expression vectors. Experiments using fusion proteins with glutathione S-transferase suggest that the carboxy-terminal 57 amino acids of PTP-S are sufficient for DNA binding. Deletion of the C-terminal 57 amino acids of PTP-S protein abolished its DNA binding property, as determined by Southwestern blotting, but not its enzymatic activity. This suggests that the C-terminal 57 amino acids are essential for the DNA binding function of this protein but not for its enzymatic activity. Another non-receptor-type protein-tyrosine phosphatase, PTP-1, when expressed in enzymatically active form in E. coli did not bind to DNA. These results suggest that a nontransmembrane protein-tyrosine phosphatase, PTP-S, binds to DNA in vitro through its carboxy-terminal noncatalytic region.