Alveolar epithelial type II cells are the progenitor cells for restoring the alveolar epithelial barrier after acute lung injury. During repair of lung injury, the alveolar epithelial type II cells reepithelialize denuded air spaces, a process that involves breaking and reforming cell adhesions. A novel technique of mechanical separation of cultured alveolar epithelial cells from in vitro matrix was used to examine the intracellular signals that result when alveolar epithelial cell adhesions are broken. The results show that the tyrosine phosphorylation levels of focal adhesion kinase, paxillin, and pp60(src) decreased immediately after mechanical separation of the cells. Levels returned to nearly normal by 24 h after mechanical separation. Paxillin and pp60(scr) coprecipitated with focal adhesion kinase regardless of their phosphorylation state. Interestingly, the tyrosine phosphorylation level of the mitogen-activated protein kinase, p42(erk2), increased 15 min after mechanical separation. Preincubation of cell monolayers with phenylarsine oxide, a protein tyrosine phosphatase inhibitor, blocked the decrease in tyrosine phosphorylation levels of focal adhesion kinase, paxillin and pp60(src). Phenylarsine oxide incubation also prevented readhesion of mechanically separated cells at 24 h, but genistein, a tyrosine kinase inhibitor, had no effect. We conclude that protein tyrosine phosphatases are activated immediately after cultured alveolar epithelial cells are mechanically separated from in vitro matrix, and their activation is required for alveolar epithelial cell readhesion.