Examination of null-mutant Drosophila and Leukocyte Common Antigen-Related (LAR)-deficient transgenic mice has demonstrated that the LAR protein tyrosine phosphatase (PTP) receptor promotes neurite outgrowth. In the absence of known ligands, the mechanisms by which LAR-type PTP receptors are regulated are unknown. We hypothesized that an alternatively spliced eleven amino acid proximal membrane segment of LAR (LAR alternatively spliced element-a; LASE-a) contributes to regulation of LAR function. Human, rat and mouse LAR cDNA sequences demonstrated that the predicted eleven amino acid inserts in rat and mouse are identical and share nine of eleven residues with the human insert. LASE-a splicing led to the introduction of a Ser residue into LAR at a position analogous to Ser residues undergoing regulated phosphorylation in other PTPs. In-situ studies revealed increasingly region-specific expression of LASE-a containing LAR transcripts during postnatal development. RT-PCR analysis of cortical and hippocampal tissue confirmed that the proportion of LAR transcripts containing LASE-a decreases during development. Immunostaining of cultured PC12 cells, cerebellar granule neurons, dorsal root ganglia and sciatic nerve sections with antibody directed against the LASE-a insert demonstrated signal in cell bodies but little if any along neurites. In contrast, staining with antibody directed to a separate domain of LAR showed accumulation of LAR along neurites. The findings that LASE-a splicing is conserved across human, rat and mouse, that the LASE-a insert introduces a Ser at a site likely to be targeted for regulated phosphorylation and that developmentally regulated splicing is coordinated with specific regional and intraneuronal localization point to important novel potential mechanisms regulating LAR-type tyrosine phosphatase receptor function in the nervous system.