Peptides containing phosphonate based non-hydrolyzable phosphotyrosyl (pTyr) mimetics previously have been shown to be competitive inhibitors of protein-tyrosine phosphatases (PTPs). These agents suffer from low cellular penetration which is partially attributable to ionization of the phosphonate group at physiological pH. We have developed the non-phosphorus containing pTyr mimetic, L-O-malonyltyrosine (L-OMT) and herein demonstrate using a PTP 1B enzyme assay that it is superior to phosphonomethyl phenylalanine (Pmp) as a pTyr mimetic when incorporated into the hexamer peptide Ac-D-A-D-E-X-L-amide (X = D,L-Pmp, IC50 = 200 mu M; X = L-OMT, IC50 = 10 mu M). Prodrug protection of L-OMT as its carboxylic acid diester could potentially increase cellular penetration, thereby making this a valuable reagent for cellular studies. (C) 1995 Academic Press, Inc.