Macroautophagy is a dynamic process whereby portions of the cytosol are encapsulated in double-membrane vesicles and delivered to the lysosome for degradation. Phosphatidylinositol-3-phosphate (PtdIns3P) is concentrated on autophagic vesicles and recruits effector proteins that are crucial for this process. The production of PtdIns3P by the class III phosphatidylinositol 3-kinase Vps34, has been well established; however, protein phosphatases that antagonize this early step in autophagy remain to be identified. To identify such enzymes, we screened human phosphatase genes by RNA interference and found that loss of PTPσ, a dual-domain protein tyrosine phosphatase (PTP), increases levels of cellular PtdIns3P. The abundant PtdIns3P-positive vesicles conferred by loss of PTPσ strikingly phenocopied those observed in cells starved of amino acids. Accordingly, we discovered that loss of PTPσ hyperactivates both constitutive and induced autophagy. Finally, we found that PTPσ localizes to PtdIns3P-positive membranes in cells, and this vesicular localization is enhanced during autophagy. We therefore describe a novel role for PTPσ and provide insight into the regulation of autophagy. Mechanistic knowledge of this process is crucial for understanding and targeting therapies for several human diseases, including cancer and Alzheimer's disease, in which abnormal autophagy might be pathological.