Absence of the tyrosine kinase activity of c-src and c-fms results in impairment of bone remodeling. Such dysfunction underscores the importance of tyrosine phosphorylation, yet the role of protein tyrosine phosphatases in bone metabolism remains unexamined. We have isolated the cDNA for a novel receptor-like tyrosine phosphatase expressed in bone and testis named osteotesticular protein tyrosine phosphatase (OST-PTP). The deduced 1711-residue protein possesses an extracellular domain with 10 fibronectin type III repeats and a cytoplasmic region with two catalytic domains. In primary rat osteoblasts, the 5.8-kilobase OST-PTP transcript is up-regulated in differentiating cultures and down-regulated in late stage mineralizing cultures. In addition, a presumed alternate transcript of 4.8-5.0 kilobases, which may lack PTP domains, is present in proliferating osteoblasts, but not detectable at other stages. Parathyroid hormone, a modulator of bone function, as well as cyclic AMP analogues, increase OST-PTP mRNA 5-8-fold in UMR 106 cells. In situ hybridization of adult rat testis revealed stage-specific expression of OST-PTP. OST-PTP may function in signaling pathways during bone remodeling, as well as serve a broader role in cell interactions associated with differentiation in bone and testis.