The low molecular weight phosphotyrosine protein phosphatase (LMW-PTP) is a cytosolic phosphotyrosine-protein phosphatase specifically interacting with the activated platelet-derived growth factor (PDGF) receptor through its active site, Overexpression of the LMW-PTP results in modulation of PDGF-dependent mitogenesis. In this study we investigated the effects of this tyrosine phosphatase on the signaling pathways relevant for PDGF-dependent DNA synthesis, MH 3T3 cells were stably transfected with active or dominant negative LMW-PTP, The effects of LMW-PTP were essentially restricted to the G(1) phase of the cell cycle, Upon stimulation with PDGF, cells transfected with the dominant negative LMW-PTP showed an increased activation of Src, whereas the active LMW-PTP induced a reduced activation of this proto-oncogene. We observe that c-Src binding to PDGF receptor upon stimulation is prevented by overexpression of LMW-PTP. These effects were associated with parallel changes in myc expression, Moreover, wild-type and dominant negative LMW-PTP differentially regulated STAT1 and STAT3 activation and tyrosine phosphorylation, whereas they did not modify extracellular signal-regulated kinase activity, However, these modifications were associated with changes in fos expression despite the lack of any effect on extracellular signal-regulated kinase activation. Other independent pathways involved in PDGF-induced mitogenesis, such as phosphatidylinositol 3-kinase and phospholipase C-gamma 1, were not affected by LMW-PTP, These data indicate that this phosphatase selectively interferes with the Src and the STATs pathways in PDGF downstream signaling. The resulting changes in myc and fos proto-oncogene expression are likely to mediate the modifications observed in the G(1) phase of the cell cycle.