The controlled development of embryo cells depends on their ability to monitor and respond to dynamic microenvironmental signals. This is frequently effected through membrane-associated receptor proteins which signal directly or indirectly through protein tyrosine phosphorylation. A search for such proteins in the developing nervous system of the chick has identified a new receptor-like protein tyrosine phosphatase (R-PTP) gene which may be responsible in part for this signalling. This gene, named CRYP alpha, is related to the LAR subfamily of R-PTPs and has extracellular homology to the neural cell adhesion molecules (CAMs). The gene is widely expressed in both the central and peripheral nervous systems, with particularly strong expression in motor neurons and in brain subregions such as the optic tectum and hypothalamus. Expression is seen both in early proliferating. neuroepithelia and in subsets of post-mitotic nerve cells. Moreover, tissue-specific and developmentally-regulated exon use has been found in the brain, suggesting that isoforms of the R-PTP protein have stage-specific neural roles. This alternative RNA splicing event affects the encoded structure of the CAM-like domain, which may in turn influence its ligand binding properties. The novel, regulated expression of this R-PTP gene suggests that it plays a role in early neural development, and that the signalling properties of the encoded phosphatase can be modified according to the differentiated state of the cells.