The present study concerns the immunocytochemical localization of the striatal enriched protein tyrosine phosphatase in the rat striatum. A novel molecular biology technique allowed us to produce a complementary DNA-generated polyclonal antibody raised against the non-catalytic domain of the striatal enriched protein tyrosine phosphatase, which selectively recognized the striatal enriched protein tyrosine phosphatase protein with 46,000 mol. wt on western blots. Immunocytochemical analysis with the specific antibody revealed strong striatal enriched protein tyrosine phosphatase immunoreactivity in the striatum. Light microscopy showed striatal striatal enriched protein tyrosine phosphatase-immunopositive neurons to be of medium size (mean diameter of 14.4 microns), and to comprise approximately 80% of the total neuronal population in the striatum. These cells had round, triangular or polygonal cell bodies with relatively little cytoplasm. Nerve fibers stained positively for striatal enriched protein tyrosine phosphatase were also present in the globus pallidus and the substantia nigra, and the nigral labeling on the ipsilateral side almost disappeared subsequent to cerebral hemitransection, suggesting these immunolabeled structures to be striatal projections. Double-immunofluorescence analysis demonstrated separate populations of striatal enriched protein tyrosine phosphatase-positive cells and neurons stained for parvalbumin. Also, ultrastructural study showed that the striatal enriched protein tyrosine phosphatase-positive neurons (n = 50) possessed no nuclear indentations or intranuclear inclusions. Thus, most striatal striatal enriched protein tyrosine phosphatase-positive neurons were thought to be of the medium-sized spinous type. At the light microscopic level, stained striatal neurons exhibited striatal enriched protein tyrosine phosphatase immunolabeling in their somata, dendrites and axonal processes, but not in their nuclei. Electron microscopic observation showed strong striatal enriched protein tyrosine phosphatase-immunoreactivity on the inner surface of the plasmalemma, on the outer surfaces of mitochondria and on microtubules, particularly of dendrites. A heavy deposit of immunoreaction product was also present on postsynaptic densities in labeled dendrites, while a light deposit was seen on the synaptic vesicles of nerve terminals. The characteristic distribution profile of striatal enriched protein tyrosine phosphatase suggested that the enzyme may play a role in a variety of functional properties of striatal neurons, especially in postsynaptic signaling processes and in regulation of microtubular functions. On the basis of the present findings, we propose the following conclusions: (i) a protein tyrosine phosphorylation system regulated by striatal enriched protein tyrosine phosphatase is involved in certain specialized cellular processes (e.g. signal transduction cascades) of medium-sized spinous neurons distinct from those of other neuronal subsets in the striatum; (ii) a striatal medium spiny neuron is characterized by its expression of striatal enriched protein tyrosine phosphatase and, therefore, the enzyme is useful for detection of the distinct subset of striatal cells or for tracing their axonal projection fibers in the basal ganglia.