Low molecular weight protein tyrosine phosphatase (LMW-PTP) is an enzyme involved in platelet-derived growth factor (PDGF)-induced mitogenesis and cytoskeleton rearrangement because it is able to bind and dephosphorylate the activated receptor. LMW-PTP presents two cysteines in positions 12 and 17, both belonging to the catalytic pocket; this is a unique feature of LMW-PTP among all protein tyrosine phosphatases. Our previous results demonstrated that in vitro LMW-PTP is oxidized by either H(2)O(2) or nitric oxide with the formation of a disulfide bond between Cys-12 and Cys-17. This oxidation leads to reversible enzyme inactivation because treatment with reductants permits catalytic activity rescue. In the present study we investigated the in vivo inactivation of LMW-PTP by either extracellularly or intracellularly generated H(2)O(2), evaluating its action directly on its natural substrate, PDGF receptor. LMW-PTP is oxidized and inactivated by exogenous oxidative stress and recovers its activity after oxidant removal. LMW-PTP is oxidized also during PDGF signaling, very likely upon PDGF-induced H(2)O(2) production, and recovers its activity within 40 min. Our results strongly suggest that reversibility of in vivo LMW-PTP oxidation is glutathione-dependent. In addition, we propose an intriguing and peculiar role of Cys-17 in the formation of a S-S intramolecular bond, which protects the catalytic Cys-12 from further and irreversible oxidation. On the basis of our results we propose that the presence of an additional cysteine near the catalytic cysteine could confer to LMW-PTP the ability to rapidly recover its activity and finely regulate PDGF receptor activation during both extracellularly and intracellularly generated oxidative stress.