PTP-S2 is a widely expressed nuclear protein tyrosine phosphatase which shows increased expression upon mitogenic stimulation of a variety of cells. In order to elucidate the role of this enzyme in cell division, stable clones of HeLa cells expressing rat PTP-S2 were isolated and their growth properties analysed. Overexpressed PTP-S2 was located in the cell nucleus and there was no significant change in the total tyrosine phosphatase activity of PTP-S2 overexpressing cells. PTP-S2 overexpressing clones, D3 and B5, showed increased rate of cell division and lower serum requirement as compared with control cells. D3 and B5 cells formed larger colonies in soft agar, were not contact inhibited upon confluency, grew in multilayers, and showed altered morphology. These results are consistent with the suggestion that PTP-S2 may be a positive regulator of cell proliferation.