Cytokines regulate the growth and differentiation of hematopoietic cells through their interaction with receptors of the cytokine receptor superfamily. This family of receptors has conserved motifs in the extracellular domain but share only limited similarity in the cytoplasmic domains. Although lacking catalytic domains, a variety of studies demonstrate that the cytokine receptors function by coupling ligand binding to induction of tyrosine phosphorylation. Recent studies have shown that the JAK family of kinases associate with cytokine receptors and are activated by ligand binding. Interaction occurs with the membrane proximal region of the cytoplasmic domain, a region that has been found to be essential for mitogenesis. One of the substrates of tyrosine phosphorylation is the receptor and, in the case of the receptor for Epo, the membrane distal region of the cytoplasmic domain is phosphorylated. Once phosphorylated, this site becomes a binding site for the amino-terminal SH2 domain of hematopoietic cell phosphatase (HCP). HCP is an important negative regulator of hematopoietic cell growth and its recruitment to the receptor complex is speculated to be important for this effect. The role of HCP is best indicated by the observation that the murine mutation, motheaten, is due to a mutation that results in the inability to make HCP. Motheaten mice die soon after birth due to the overproliferation of a variety of hematopoietic lineages. Together the results demonstrate an essential role in both protein tyrosine phosphorylation and de-phosphorylation in the growth regulation of hematopoiesis.