The receptor protein-tyrosine phosphatase alpha (pTP alpha) is involved in the activation of c-Src kinase as well as in down-regulation of the insulin signal. To investigate the role of PTP alpha in activation of the Src kinase in more detail we tried to overexpress this phosphatase in NIH3T3 fibroblasts. Although PTP alpha has been overexpressed in rat embryonic fibroblasts and in embryonic carcinoma cells and should increase mitogenic responses we were not able to achieve a detectable overexpression, In contrast, expression of partially (C442S) or completely inactive (C442S,C732S) PTP alpha or of phosphatase active PTP alpha containing mutation Y781F or Y798F was possible. The level of expression, however, was reduced to background after several passages of lines expressing PTP alpha YC442S,C732S and PTP alpha Y781F. When employed in a focus formation assay, only infection with virus encoding PTP alpha Y798F induced Src-dependent formation of foci. In immunofluorescence studies, PTP alpha C442S and PTP alpha Y781F but not PTP alpha Y798F colocalized with proteins found in focal adhesion plaques. Treatment of PTP alpha YC442S-overexpressing cells with vanadate abolished this colocalization and led to proteolytic processing of the phosphatase. We conclude that tyrosine 798 in PTP alpha is important for localization at focal adhesion plaques. Inhibition of phosphatases by vanadate treatment releases PTP alpha from focal adhesions.