Protein-tyrosine phosphatase-L1 (PTPL1, also known as FAP-1, PTP1E, PTP-BAS, and PTPN13) is mutated in a significant number of colorectal tumors and may play a role in down-regulating signaling responses mediated by phosphatidylinositol 3-kinase, although the precise substrates are as yet unknown. In this study, we describe a 1.8 Å resolution crystal structure of a fully active fragment of PTPL1 encompassing the catalytic domain. PTPL1 adopts the standard PTP fold, albeit with an unusually positioned additional N-terminal helix, and shows an ordered phosphate in the active site. Interestingly, a positively charged pocket is located near the PTPL1 catalytic site, reminiscent of the second phosphotyrosine binding site in PTP1B, which is required to dephosphorylate peptides containing two adjacent phosphotyrosine residues (as occurs for example in the activated insulin receptor). We demonstrate that PTPL1, like PTP1B, interacts with and dephosphorylates a bis-phosphorylated insulin receptor peptide more efficiently than monophosphorylated peptides, indicating that PTPL1 may down-regulate the phosphatidylinositol 3-kinase pathway, by dephosphorylating insulin or growth factor receptors that contain tandem phosphotyrosines. The structure also reveals that four out of five PTPL1 mutations found in colorectal cancers are located on solventexposed regions remote from the active site, consistent with these mutants being normally active. In contrast, the fifth mutation, which changes Met-2307 to Thr, is close to the active site cysteine and decreases activity significantly. Our studies provide the first molecular description of the PTPL1 catalytic domain and give new insight into the function of PTPL1.Protein-tyrosine phosphatase-L1 (PTPL1) 1 is a non-receptor protein-tyrosine phosphatase and is the largest of the known 107 protein-tyrosine phosphatases (PTPs), comprising 2485 residues (1). The N terminus contains a kinase non-catalytic C-lobe (KIND) domain (residues 3-190), a new protein module identified recently (2), and a four-point-one/ezrin/radixin/moesin (FERM) domain (residues 568 -781). PTPL1 also contains five PSD-95/Drosophila disc large/zonula occludens (PDZ) domains located between residues 1102 and 1990 and a proteintyrosine phosphatase domain at its C terminus (residues 2087-2485). PTPL1 is the only tyrosine phosphatase possessing this domain organization (1). The non-catalytic region of PTPL1 is likely to regulate its cellular localization and/or interaction of PTPL1 with other regulators and/or substrates (reviewed in Ref.3). The non-catalytic domain of PTPL1 does not appear to control PTPL1 activity directly as the isolated catalytic domain of PTPL1 possesses the same activity as full-length PTPL1 (4).Recent studies have provided initial evidence that PTPL1 may play a role in regulating PI 3-kinase-dependent signaling pathways that regulate cell growth and survival responses. This was first based on the finding that overexpression of PTPL1 in a breast cancer cell line induced the dephosphorylation of the...