We have examined the in vivo activity of receptor-like protein-tyrosine phosphatase alpha (PTP alpha) toward p59(fyn), a widely expressed Src family kinase. In a coexpression system, PTP alpha effected a dose-dependent tyrosine dephosphorylation and activation of p59(fyn), where maximal dephosphorylation correlated with a 5-fold increase in kinase activity. PTP alpha expression resulted in increased accessibility of the p59(fyn) SH2 domain, consistent with a PTP alpha-mediated dephosphorylation of the regulatory C-terminal tyrosine residue of p59(fyn). No p59(fyn) dephosphorylation was observed with an enzymatically inactive mutant form of PTP alpha: or with another receptorlike PTP, CD45. Many enzyme-linked receptors are complexed with their substrates, and we examined whether PTP alpha and p59(fyn) underwent association, Reciprocal immunoprecipitations and assays detected p59(fyn) and an appropriate kinase activity in PTP alpha immunoprecipitates and PTP alpha and PTP activity in p59(fyn) immunoprecipitates, No association between CD45 and p59(fyn) was detected in similar experiments. The PTP alpha-mediated activation of p59(fyn) is not prerequisite for association since wild-type and inactive mutant PTP alpha bound equally well to p59(fyn). Endogenous PTP alpha and p59(fyn) were also found in association in mouse brain, Together, these results demonstrate a physical and functional interaction of PTP alpha and p59(fyn) that may be of importance in PTP alpha-initiated signaling events.