We have characterized a growth factor-inducible gene, erp, and demonstrated that it encodes a 367-aminoacid nontransmembrane tyrosine phosphatase protein with significant similarity to The proliferation of animal cells is initiated and regulated by growth factors. The interaction of growth factors with their specific receptors generates a cascade of intracellular biochemical signals leading to the expression of growth factor-regulated genes. Recent studies on the genetic basis of cell proliferation have shown that growth factors and mitogens are capable of rapidly inducing a complex set of genes, named the immediate-early genes, in fibroblasts. These genes are transcriptionally activated within minutes after growth factor or mitogen addition, independent of de novo protein synthesis (3,12,29). Some of these genes encode bona fide or putative transcription factors, including members of the Fos, Jun, Myc, Rel, and zinc finger family proteins, which are thought to act as "third messengers" in the cascade of events triggered by growth factors (5,7,22,30,40). The function of some of these proteins has been demonstrated to be essential for cell cycle progression and entry into the S phase (23,26,27,36). Further evidence that some of these proteins have a positive effect on cell growth is the observation that their deregulated expression can induce malignant cell transformation (28,31,34,37,42,43,50).We have previously reported the isolation of a set of cDNAs corresponding to serum-inducible immediate-early genes in mouse fibroblasts (3). In this report, we describe the characterization of one of these genes and show that it encodes a nontransmembrane protein tyrosine phosphatase. As RNA extraction and Northern (RNA blot) analysis. Total RNA was prepared from cells and tissues by the guanidine hydrochloride procedure (11). To obtain polyadenylated RNA, total RNA was dotted onto messenger-activated paper (Orgenics Ltd.), washed twice for 15 min each in PBS, and then washed with 70% ethanol for 10 min. After the messenger-activated paper was dried, the polyadenylated RNA was released by incubation in water at 70°C for 5 min. For Northern blot analysis, RNA was separated in 1% agarose gels containing 6% formaldehyde (46) and blotted onto a GeneScreen Plus membrane (NEN-DuPont). The purified insert of the original erp clone, X97 (3), was labeled by random-primer labeling (16,17) to a specific activity of 1 x 109 to 4 x 109 cpm/,ug. The hybridization was carried out in 50% formamide-0.5% sodium dodecyl sulfate (SDS)-5 x 5195