Alendronate (4-amino-1-hydroxybutylidene-1,1-bisphosphonate) is a potent bisphosphonate that inhibits osteoclastic bone resorption and has proven effective for the treatment of osteoporosis. Its molecular mechanism of action, however, has not been defined precisely. Here we report that alendronate is a potent inhibitor of the protein-tyrosine-phosphatase-meg1 (PTPmeg1). Two substrates were employed in this study: fluorescein diphosphate and the phosphotyrosyl peptide src-pY527. With either substrate, alendronate was a slow binding inhibitor of PTPmeg1. Among the other bisphosphonates studied, alendronate was more potent and selective for PTPmeg1. The hydrolysis of fluorescein diphosphate by PTP epsilon and PTPmeg1 was sensitive to alendronate, with IC50 values of less than 1 microM; PTPsigma, however, under the same conditions, was inhibited by only 50% with 141 microM alendronate. Similarly, with the src-pY527 substrate, alendronate inhibition was also PTP dependent. Alendronate inhibited PTPmeg1 with an IC50 value of 23 microM, PTPsigma with an IC50 value of 2 microM, and did not inhibit PTP epsilon at concentrations up to 1 mM. The alendronate inhibition of these three PTPs and two substrates is consistent with the formation of a ternary complex comprised of enzyme, substrate, and inhibitor. PTP inhibition by hisphosphonates or vanadate was diminished by the metal chelating agent EDTA, or by the reducing agent dithiothreitol, suggesting that a metal ion and the oxidation of a cysteine residue are required for full inhibition. These observations show substrate- and enzyme-specific PTP inhibition by alendronate and support the possibility that a certain PTP(s) may be the molecular target for alendronate action.