The recent discovery of the vaccinia virus protein phosphatase VH1, and its mammalian counterparts has highlighted a novel subfamily of protein tyrosine phosphatases that exhibit dual specificity toward phosphotyrosine- and phosphoserine/threonine-residues. We have identified further members of this subfamily. The characterisation of one clone in particular, which we have named threonine-tyrosine phosphatase 1 (TYP 1), encodes a protein homologous to CL100, but differs dramatically in its regulation. TYP 1 is not expressed in human fibroblasts unlike other CL100-like genes. Furthermore, northern analysis has demonstrated that following mitogenic stimulation of squamous cells, induction of TYP 1 mRNA reaches its maximal levels after four hours, in contrast to the immediate early CL100-like genes. Both TYP 1 and CL100 mRNAs are induced upon TGF-beta treatment of squamous cell lines sensitive to the growth factors antiproliferative effects. When TYP 1 is transfected into COS-1 cells, the gene product inhibits both ERK2 and p54 MAP kinase subfamilies. In addition, we show that purified TYP 1 protein efficiently inactivates recombinant ERK2 in vitro by the concomitant dephosphorylation of both its phosphothreonine and -tyrosine residues. TYP 1 encodes a nuclear protein, which when expressed in COS cells is stabilised by EGF treatment.