Abstract Background Protein tyrosine phosphatases (PTPs) are important cell signaling regulators with major pathological implications. LYP (also known as PTPN22) is an intracellular enzyme initially found to be predominately expressed in lymphocytes. Importantly, an allelic R620W variant of LYP is strongly associated with multiple autoimmune diseases, including systemic lupus erythematosus, rheumatoid arthritis, type 1 diabetes, and autoimmune thyroid disease. Results In this study, we isolated a novel isoform of LYP designated LYP3. LYP3 differs from LYP1, the known isoform of LYP, in that it lacks a 28 amino acid segment right after the R620W site embedded in a proline-rich protein-protein interaction motif. Genomic sequence analysis revealed that LYP3 resulted from alternative splicing of the LYP gene located on chromosome 1p 13.3-13.1. Reverse transcription PCR analyses of 48 human tissues demonstrated that both LYP1 and LYP3 are predominantly expressed in primary and secondary lymphoid tissues but the relative expression levels of the two isoforms varies in different human tissues and individuals. Conclusions We thus identified a new variant form of LYP and conducted a comprehensive analysis of LYP tissue expressions. Considering the pathogenesis of LYP R620W, we believe that the expression of LYP3 may have an important role in regulating activity and function of LYP and may be implicated in autoimmune diseases.