Phosphatase in activated T cells (PAC-1) is a mitogen-induced early responsive gene. It encodes a 32 kDa tyrosine-threonine dual specificity phosphatase. Constitutive expression of PAC-1 leads to an inhibition of MAP kinase activity in vivo. Such constitutive expression was reported in HTLV-1 infected cell lines. In the present study, we observed the constitutive over-expression of two transcripts related to PAC-1 in large granular lymphocyte (LGL) leukemia. By screening a LGL leukemia cDNA library using the 3' end of a PAC-1 probe, we obtained a clone (clone 8) which retains one and one half introns, excludes two exons, and matches one hundred percent with a DNA sequence on chromosome 2. The deduced amino acid sequence of the predicted protein contains 170 amino acids and is 144 amino acids shorter than PAC-1. When we expressed this protein in Escherichia coli as a GST-fusion protein, a 45 kDa (19 kDa PAC-1 variant+26 kDa GST protein) protein was obtained. The expressed protein was purified to near homogeneity by using a glutathione affinity column. The purified protein did not have any intrinsic phosphatase activity when assayed in vitro. But when this purified protein was added to a phosphatase assay system in combination with a recombinant dual specificity phosphatase, CL100, enhanced phosphatase activity was observed. The significance of the constitutive over-expression and its physiological role of this protein remain to be established in leukemic LGL.