The receptor protein-tyrosine phosphatase PTP is a member of the Ig superfamily of cell adhesion molecules. The extracellular domain of PTP contains motifs commonly found in cell adhesion molecules. The intracellular domain of PTP contains two conserved catalytic domains, only the membrane-proximal domain has catalytic activity. The unique features of PTP make it an attractive molecule to transduce signals upon cell-cell contact. PTP has been shown to regulate cadherin-mediated cell adhesion, neurite outgrowth, and axon guidance. Protein kinase C is a component of the PTP signaling pathway utilized to regulate these events. To aid in the further characterization of PTP signaling pathways, we used a series of GST-PTP fusion proteins, including catalytically inactive and substrate trapping mutants, to identify PTP-interacting proteins. We identified IQGAP1, a known regulator of the Rho GTPases, Cdc42 and Rac1, as a novel PTP-interacting protein. We show that this interaction is due to direct binding. In addition, we demonstrate that amino acid residues 765-958 of PTP, which include the juxtamembrane domain and 35 residues of the first phosphatase domain, mediate the binding to IQGAP1. Furthermore, we demonstrate that constitutively active Cdc42, and to a lesser extent Rac1, enhances the interaction of PTP and IQGAP1. These data indicate PTP may regulate Rho-GTPase-dependent functions of IQGAP1 and suggest that IQGAP1 is a component of the PTP signaling pathway. In support of this, we show that a peptide that competes IQGAP1 binding to Rho GTPases blocks PTP-mediated neurite outgrowth.Reversible protein-tyrosine phosphorylation is a primary mode of regulation for several cellular functions including growth, differentiation, adhesion, and protein trafficking. The overall tyrosine phosphorylation state of a protein is regulated by protein-tyrosine kinases (1) and protein-tyrosine phosphatases (2). Similar to the family of protein-tyrosine kinases, the family of protein-tyrosine phosphatases includes both non-receptor and receptor type enzymes. Unlike the tyrosine kinases, however, few substrates and downstream signaling molecules of tyrosine phosphatases have been identified. This manuscript focuses on the receptor protein-tyrosine phosphatase (RPTP), 2 PTP, and the identification of novel PTP-interacting proteins to aid in the elucidation of the PTP signaling pathway. The extracellular domain of PTP contains sequence motifs similar to those in cell adhesion molecules including: a MAM domain, an immunoglobulin (Ig) domain, and four fibronectin type-III repeats (3). The MAM domain (Meprins, A5, PTP Mu) is a sequence motif that is suggested to play a role in protein dimerization (4). Ig domains are disulfide-bonded structures found in many cell surface proteins and have been shown to mediate homophilic and heterophilic binding between cell adhesion molecules. Fibronectin type-III motifs, originally identified in the extracellular matrix protein fibronectin, are present in many cell adhesion molecules. PTP has been show...