The molecular mechanisms of signal transduction have been at the focus of increasingly intense scientific research. As a result, our understanding of protein tyrosine kinase-mediated signaling has advanced at an unprecedented pace during the past decade. In contrast, the study of protein tyrosine phosphatases has lagged behind, but is now gathering momentum and is predicted to become a "hot topic" in the field within the next few years. This review summarizes the current state-of-the art in our understanding of the structure, regulation and role of protein tyrosine phosphatases with emphasis on the lymphocyte system.