T cells that lack the CD45 transmembrane tyrosine phosphatase have a variety of T-cell receptor (TCR) signaling defects that are corrected by reexpression of wild-type CD45 or its intracytoplasmic domains. In this study, a chimeric molecule containing the myristylation sequence of Src and the intracellular portion of CD45, previously shown to restore function in CD45-T cells, was mutagenized to determine if membrane-associated CD45 tyrosine phosphatase activity is required to restore TCR-mediated signaling in CD45-T cells. Abolition of enzymatic activity by substitution of a serine for a critical cysteine in the first catalytic domain resulted in failure of this molecule to restore TCR signaling. Another mutation, in which a single amino acid substitution destroyed the myristylation site, resulted in failure of the chimeric molecule to partition to the plasma membrane. Although expressed at high levels and enzymatically active, this form of intracellular CD45 also failed to restore normal signaling in CD45-T cells. These findings strongly suggest that CD45's function in TCR signaling requires its proximity to membrane-associated tyrosine phosphatase substrates.T-cell activation via the T-cell antigen receptor (TCR) is accompanied by increases in tyrosine phosphorylation of many proteins. The known substrates for activation-induced tyrosine kinases include 4 and other chains of the TCR (30, 34), phospholipase C yl (26), the ZAP-70 tyrosine kinase (6), the clathrin-binding valosin-containing protein (10, 29), Shc (31), Vav (4), and the cytoskeletal-associated protein ezrin (11). The importance of tyrosine phosphorylation as a primary event in T-cell activation is supported by several observations. First, tyrosine phosphorylation after TCR perturbation precedes other signals (17). Second, drugs that inhibit tyrosine kinase activation also prevent TCR-induced increases in intracellular Ca2+ concentration ([Ca2+]1) and hydrolysis of phosphatidylinositol bisphosphate (18,25). Third, T cells that lack the Lck or Fyn member of the Src family of tyrosine kinases develop abnormally and have aberrant TCR signaling properties (1,37,38).While much attention has focused on the role of tyrosine kinases in modulating the state of intracellular protein phosphorylation, it has become clear the tyrosine phosphatases play an equally critical role. Of particular interest is CD45, a transmembrane tyrosine phosphatase expressed by the large majority of bone marrow-derived cells. Jurkat), baseline tyrosine phosphorylation is normal, but the normal enhancement that usually follows TCR perturbation does not occur (21). In CD45-YAC-1 T cells, there is marked spontaneous tyrosine hyperphosphorylation, but no further increases are induced after TCR cross-linking (44). The reason for the differences between cell lines is unknown but presumably reflects differences in other biologically active molecules that may vary between them. Mice in which CD45 has been eliminated by homologous recombination also manifest a variety of lymphocyte abnor...