Expression of the receptor-type tyrosine phosphatase LAR was studied in cells of the murine hemopoietic system. The gene is expressed in all cells of the T cell lineage but not in cells of any other hemopoietic lineage and the level of expression in T cells is developmentally regulated. The CD4(-)8(-)44(+) early thymic immigrants and mature (CD4(+)8(-)/CD4(-)8(+)) thymocytes and T cells express low levels, whereas immature (CD4(-)8(-)44(-) and CD4(+)8(+)) thymocytes express high levels of LAR. Among bone marrow cells only uncommitted c-kit(+)B220(+)CD19(-) precursors, but not B cell lineage committed c-kit(+)B220(+)CD19(+) precursors, express low levels of LAR. In contrast to the c-kit(+)B220(+)CD19(+) pre-BI cells from normal mice, counterparts of pre-BI cells from PAX-5-deficient mice express LAR, indicating that PAX-5-mediated commitment to the B cell lineage results in suppression of LAR. During differentiation of PAX-5-deficient pre-BI cell line into non-T cell lineages, expression of LAR is switched off, but it is up-regulated during differentiation into thymocytes. Thus, within the hemopoietic system, LAR appears to be a T cell lineage-specific receptor-type phosphatase. However, surprisingly, truncation of its phosphatase domains has no obvious effect on T cell development, repertoire selection or function.