Regulation of ion channel function by intracellular processes is fundamental for controlling synaptic signaling and integration in the nervous system. Currents mediated by N-methyl-D-aspartate (NMDA) receptors decline during whole-cell recordings and this may be prevented by ATP. We show here that phosphorylation is necessary to maintain NMDA currents and that the decline is not dependent upon Ca2+. A protein tyrosine phosphatase or a peptide inhibitor of protein tyrosine kinase applied intracellularly caused a decrease in NMDA currents even when ATP was included. On the other hand, pretreating the neurons with a membrane-permeant tyrosine kinase inhibitor occluded the decline in NMDA currents when ATP was omitted. In inside-out patches, applying a protein tyrosine phosphatase to the cytoplasmic face of the patch caused a decrease in probability of opening of NMDA channels. Conversely, open probability was increased by a protein tyrosine phosphatase inhibitor. These results indicate that NMDA channel activity is reduced by a protein tyrosine phosphatase associated with the channel complex.