A novel nonreceptor protein tyrosine phosphatase (PTP), PTP-K1, was identified using a consensus polymerase chain reaction-based approach. The full length cDNA encompasses an open reading frame of 1362 base pairs, predicting a protein of 453 amino acid residues with a molecular mass of 54 kDa. The PTP domain is located in the N-terminal portion of the molecule and shares approximately 50% amino acid identify with two other nonreceptor PTPs: PEP and PTP-PEST. PTP-K1 is preferentially expressed in mouse bone marrow with transcripts of 1.7 kb, 1.9 kb and 3.5 kb. The 1.7 kb transcript was also detected in kidney, lung and ovary. The PTP domain of PTP-K1 was expressed as a fusion protein in bacteria and had intrinsic PTP catalytic activity. Indirect immunofluorescence microscopy in COS-7 cells showed that PTP-K1 was localized to the cytoplasm. Ptp-k1 was mapped to mouse chromosome 1, and was closely linked to the interleukin-1 receptor gene. The high level expression of PTP-K1 mRNA in bone marrow suggests that PTP-K1 may be involved in signal transduction in growth and differentiation of hematopoietic cells.