Phosphotyrosyl phosphatase activator (PTPA), a 37 kDa cytosolic protein that specifically activates the phosphotyrosyl phosphatase activity of the dimeric form of PP2A, was cloned from Drosophila melanogaster and Saccharomyces cerevisiae. Sequence alignment of PTPA from yeast to human revealed highly conserved regions including the type B fragment of the putative PTPA ATP binding site. We generated PTPA deletion mutants of these conserved regions as well as point mutations within regions that were suggested to be functionally important. The recombinant proteins were expressed in E. coli and subsequently purified. Activity measurements, linked with immunological detection, revealed that most of the well-conserved regions are essential for PTPA activity. However, neither the type A fragment of the putative ATP binding site nor the cysteine-rich region, present in all but the Drosophila and yeast homologues, appeared to be essential for PTPA activity. Moreover, we observed that PTPA truncated at glycine266 behaves as a dominant negative mutant since it is inhibitory to the wild-type PTPA.