We have begun to explore the downstream signaling pathways of receptor protein tyrosine phosphatases (RPTPs) that control axon guidance decisions in the Drosophila central nervous system. We have focused our studies on the adhesion molecule-like gp150 protein, which binds directly to and is an in vitro substrate for the RPTP DPTP10D. Here we show that gp150 and DPTP10D form stable complexes in Drosophila Schneider 2 (S2) cells and in wild-type larval tissue. We also demonstrate that the DPTP10D cytoplasmic domain is sufficient to confer binding to gp150. gp150 has a short cytoplasmic domain containing four tyrosines, all found within sequences similar to immunoreceptor family tyrosine-based activation motifs (ITAMs). We demonstrate that gp150 is tyrosine phosphorylated in wild-type larvae. In S2 cells, gp150 becomes tyrosine phosphorylated following incubation with PTP inhibitors or upon coexpression of the Dsrc tyrosine kinase. Phosphorylated Dsrc and an unknown 40-kDa phosphoprotein form stable complexes with gp150, thereby implicating them in a putative gp150 signaling pathway. When coexpressed with gp150, either full-length DPTP10D or its cytoplasmic domain mediates gp150 dephosphorylation whereas a catalytically inactive DPTP10D cytoplasmic domain does not. The neural RPTP DPTP99A can also induce gp150 dephosphorylation but does not coimmunoprecipitate with gp150. Taken together, the results suggest that gp150 transduces signals via phosphorylation of its ITAM-like elements. Phosphotyrosines on gp150 might function as binding sites for downstream signaling molecules, thereby initiating a signaling cascade that could be modulated in vivo by RPTPs such as DPTP10D.