The HD-PTP protein has been described as a tumor suppressor candidate and based on its amino acid sequence, categorized as a classical non-transmembrane protein tyrosine phosphatase (PTP). To date, no HD-PTP phosphorylated substrate has been identified and controversial results concerning its catalytic activity have been recently reported.Here we report a rigorous enzymatic analysis demonstrating that the HD-PTP protein does not harbor tyrosine phosphatase or lipid phosphatase activity using the highly sensitive DiFMUP substrate and a panel of different phosphatidylinositol phosphates. We found that HD-PTP tyrosine phosphatase inactivity is caused by an evolutionary conserved amino acid divergence of a key residue located in the HD-PTP phosphatase domain since its back mutation is sufficient to restore the HD-PTP tyrosine phosphatase activity. Moreover, in agreement with a tumor suppressor activity, HD-PTP expression leads to colony growth reduction in human cancer cell lines, independently of its catalytic PTP activity status.In summary, we demonstrate that HD-PTP is a catalytically inactive protein tyrosine phosphatase. As such, we identify one residue involved in its inactivation and show that its colony growth reduction activity is independent of its PTP activity status in human cancer cell lines.