Striatal-enriched protein tyrosine phosphatase (STEP) is a brain-specific tyrosine phosphatase that plays a major role in the development of synaptic plasticity. Recent findings have implicated STEP in several psychiatric and neurological disorders, including Alzheimer’s disease, schizophrenia, fragile X syndrome, Huntington’s disease, stroke/ischemia, and stress-related psychiatric disorders. In these disorders, STEP protein expression levels and activity are dysregulated, contributing to the cognitive deficits that are present. In this review, we focus on the most recent findings on STEP, discuss how STEP expression and activity are maintained during normal cognitive function, and how disruptions in STEP activity contribute to a number of illnesses.