β-Arrestins turn off G protein-mediated signals and initiate distinct G protein-independent signaling pathways. We previously demonstrated that angiotensin AT1 receptor-bound β-arrestin 1 is cleaved after Phe388 upon angiotensin II stimulation. The mechanism and signaling pathway of angiotensin II-induced β-arrestin cleavage remain largely unknown. Here, we show that protein Tyr phosphatase activity is involved in the regulation of β-arrestin 1 cleavage. Tagging of green fluorescent protein (GFP) either to the N-terminus or C-terminus of β-arrestin 1 induced conformational changes and the cleavage of β-arrestin 1 without angiotensin AT1 receptor activation. Orthovanadate and molybdate, inhibitors of protein Tyr phosphatase, attenuated the cleavage of C-terminal GFP-tagged β-arrestin 1 in vitro. The inhibitory effects of okadaic acid and pyrophosphate, which are inhibitors of protein Ser/Thr phosphatase, were less than those of protein Tyr phosphatase inhibitors. Cell-permeable pervanadate inhibited angiotensin II-induced cleavage of β-arrestin 1 in COS-1 cells. Our findings suggest that Tyr phosphorylation signaling is involved in the regulation of angiotensin II-induced β-arrestin cleavage.