Protein tyrosine phosphorylation/dephosphorylation is a fundamental mechanism in the regulation of cell proliferation and neoplastic transformation; this metabolic process is modulated by the opposing activities of protein tyrosine kinases and protein tyrosine phosphatases (PTPases). While the role of protein tyrosine kinases has been examined extensively in human breast tumorigenesis, the role of PTPases in this process is virtually unknown. To address this issue, an activated neu oncogene was introduced into an immortalized nontumorigenic human breast epithelial cell line (184B5). This resulted in a substantial increase in P185neu expression, which led to the formation of progressively growing carcinomas after such cells were inoculated into athymic nude mice. Importantly, a striking increase in the expression of specific PTPases, LAR and PTP1B, was observed in 3 independently neu transformed cell lines and their derived tumors. This elevation was verified at both the mRNA and protein levels. TC-PTP PTPase expression was only slightly increased in these neu transformed cells, and no expression of CD45 PTPase was observed. The level of neu expression, as well as the differential expression between P185neu and LAR/PTP1B, directly correlated with tumorigenicity. Furthermore, rat mammary carcinomas with elevated neu expression (neu-induced) also had sharply elevated LAR-PTPase expression when compared to rat mammary carcinomas with little or no neu expression (7,12-dimethylbenzanthracene induced); the level of expression of LAR PTPase was directly correlated with the level of neu expression. Thus, our results provide the first evidence that, in human breast carcinoma cells and in rat mammary carcinomas that have an induced increase in neu expression, a consistent and substantial increase in the expression of specific PTPases occurs. The relationship between P185neu-protein tyrosine kinase expression and specific PTPase expression may play a critical role in human breast tumorigenesis.