The propeptide region of the lysyl oxidase proenzyme (LOX-PP) has been shown to inhibit Ras signaling in NIH 3T3 and lung cancer cells with activated RAS, but its mechanism of action is poorly understood. Here, a yeast two-hybrid assay of LOX-PP-interacting proteins identified a clone encoding the intracellular phosphatase domains of receptor-type protein tyrosine phosphatase kappa (RPTP-), and the interaction of the two proteins in mammalian cells was confirmed. RPTP-is proteolytically processed to isoforms that have opposing effects on -catenin activity. The RPTP-transmembrane P subunit interacts with and sequesters -catenin at the cell membrane, where it can associate with E-cadherin and promote intercellular interactions. At high cell density, further processing of the P subunit yields a phosphatase intracellular portion (PIC) subunit, which chaperones -catenin to the nucleus, where it can function to activate transcription. Lung cancer cells were found to contain higher PIC levels than untransformed lung epithelial cells. In H1299 lung cancer cells, ectopic LOX-PP expression reduced the nuclear levels of PIC by increasing its turnover in the lysosome, thereby decreasing the nuclear levels and transcriptional activity of -catenin while increasing -catenin membrane localization. Thus, LOX-PP is shown to negatively regulate pro-oncogenic -catenin signaling in lung cancer cells.The enzyme lysyl oxidase (LOX) catalyzes oxidative modifications that promote the formation of lysine-derived covalent cross-links needed for the normal structural integrity of the extracellular matrix. LOX is synthesized as a 50-kDa inactive proenzyme (pro-LOX), which is N-and O-glycosylated within sites of the propeptide domain (45), secreted, and then cleaved to the functional C-terminal ϳ30-kDa enzyme and an ϳ18-kDa N-terminal lysyl oxidase propeptide (LOX-PP). Another major function of the LOX gene was discovered with the observation that its expression inhibited the transforming activity of the H-Ras oncogene in NIH 3T3 fibroblasts (6,22). Consistent with this finding, many cancers and derived cell lines display reduced levels of LOX protein or RNA (3,5,12,16,17,22,24,25,38). LOX reexpression was also seen in stable phenotypic revertants of Ras-transfected NIH 3T3 cells following interferon treatment (5, 22). These and other findings led Contente et al. (5) to term the LOX gene the Ras recision gene (rrg). Subsequently, pro-LOX was shown to inhibit the activities of the Akt and Erk kinases and NF-B transcription factors in Ras-transformed NIH 3T3 cells (19), and ectopic expression of the LOX gene in gastric cancer cells resulted in reduced tumor formation in nude mice (21). More recently, our group noted that LOX-PP was sufficient to mediate the rrg activity of the LOX gene in Ras-transformed NIH 3T3 cells (35). Consistent with these findings, Bouez et al. showed that LOX protein expression was absent from human basal and squamous cell carcinomas and that a reduction in LOX mRNA levels but not enzyme activity caused a more in...