Site-selective dephosphorylation of receptor tyrosine kinases contributes to receptor regulation. The receptor-like protein tyrosine phosphatase DEP-1 site-selectively dephosphorylates the PDGF beta-receptor. DEP-1 dephosphorylation of original and chimeric phospho-peptides spanning the preferred pY1021 and the less preferred pY857 and pY562 sites was analyzed. Double substitutions of basic residues at -4 and +3 of pY857 and pY562 peptides improved affinity. Substitutions of single amino acids indicated preference for an acidic residue at position -1 and a preference against a basic residue at position +3. DEP-1 site-selective dephosphorylation of PDGF beta-receptor is thus determined by the primary sequence surrounding phosphorylation sites and involves interactions with residues spanning at least between positions -1 and +3.