AbstractCD45, a receptor-like protein tyrosine phosphatase (PTP), plays an essential role in lymphocyte development and immune responses. Recent evidence suggests that dimerization of CD45 down-regulates its function. However, the mechanisms by which CD45 dimerization is regulated remain unclear, and there is no direct evidence that the PTP activity of CD45 dimers is less than that of monomers. CD45 in lymphocytes associates with CD45-AP (CD45-associated protein). Here we show that T cells from CD45-AP-null mice have a much higher level of CD45 dimers than those of wild-type mice, suggesting that CD45-AP inhibits CD45 dimer formation. This was confirmed with the use of a novel CD45-AP-null T-cell line, ALST-1, that we established from a spontaneous thymic tumor found in a CD45-AP-null mouse. Transfected CD45-AP inhibited CD45 dimer formation in ALST-1 cells in proportion to the amount of CD45-AP expressed. Finally, with the use of microsomal fractions from both mouse thymocytes and ALST-1 transfectants, the PTP activity of CD45 was found to be significantly lower in CD45-AP-negative cells than in CD45-AP-positive cells. Therefore, our results support a model in which binding of CD45-AP to inactive CD45 dimers converts them to active monomers. (Blood. 2004;103:3440-3447)