Stem cells are capable of extensive self-renewal in the absence of differentiation. The maintenance of this undifferentiated state occurs despite the fact that this cell is exposed to a milieu that is rich in a variety of growth and differentiation factors. A unifying feature of such hematopoietic factors is that they mediate their effects through the phosphorylation of tyrosine residues by various cellular kinases. Therefore, one mechanism that might inhibit such differentiation signals in the self-renewing stem cell is the dephosphorylation of tyrosine residues by protein tyrosine phosphatases (PTPs). We have thus investigated the types of tyrosine phosphatases expressed by murine embryonic lin(lo)CD34hiSca(hi) hematopoietic progenitor cells by using a consensus polymerase chain reaction (PCR) approach. Although many known tyrosine phosphatases were detected using this method, a novel PTP related to the previously described PTP PEST type enzymes, murine PTP PEP and murine/human PTP PEST, was also observed. Cloning of the full-length cDNA encoding this enzyme showed that it was indeed a novel new member of this family, with an amino terminal tyrosine phosphatase domain followed by a region rich in serine, threonine, and proline. The carboxy terminus of this novel PTP contained a short sequence that was homologous to a region of the murine PTP PEP that was involved with nuclear localization. Bacterial expression of the phosphatase domain showed that this enzyme could efficiently dephosphorylate tyrosines in vitro. Analysis of the expression of the novel nuclear PTP by quantitative PCR showed that the transcript disappeared as the lin(lo)CD34hiSca(hi) cells differentiated in the presence of interleukin-1, interleukin-3, erythropoietin, and granulocyte- macrophage colony-stimulating factor. In agreement with its potential role in the hematopoietic progenitor cell, this novel PTP was expressed at a barely detectable level in a very limited subset of adult tissues. However, analysis of several murine hematopoietic progenitor cell lines, but not of a differentiated T-cell line, showed a high level of expression of the novel PTP. These data suggest that this novel phosphatase may play a critical role in the maintenance of the undifferentiated state of the hematopoietic stem cell.