The STEP family of protein tyrosine phosphatases is highly enriched within the CNS. Members of this family are alternatively spliced to produce both transmembrane and cytosolic variants. This manuscript describes the distinctive intracellular distribution and enzymatic activity of the membrane-associated isoform STEP 61 . Transfection experiments in fibroblasts, as well as subcellular fractionations, sucrose density gradients, immunocytochemical labeling, and electron microscopy in brain tissue, show that STEP 61 is an intrinsic membrane protein of striatal neurons and is associated with the endoplasmic reticulum. In addition, structural analysis of the novel N-terminal region of STEP 61 reveals several motifs not present in the cytosolic variant STEP 46 . These include two putative transmembrane domains, two sequences rich in Pro, Glu, Asp, Ser, and Thr (PEST sequences), and two polyproline-rich domains. Like STEP 46 , STEP 61 is enriched in the brain, but the recombinant protein has less enzymatic activity than STEP 46 . Because STEP 46 is contained in its entirety within STEP 61 and differs only in the extended N terminus of STEP 61 , this amino acid sequence is responsible for the association of STEP 61 with membrane compartments and may also regulate its enzymatic activity.