We used a substrate-trapping technique to search for substrates of protein tyrosine phosphatase (PTP) 1B. A catalytically inactive form of this enzyme forms a stable, phosphotyrosine-dependent complex with epidermal growth factor receptor (EGFR) both in vitro and in cells. PTP1B also interacts with activated platelet-derived growth factor receptor (PDGFR) but not with colony-stimulating factor 1 receptor (CSF-1R). After binding to EGFR, PTP1B becomes tyrosine-phosphorylated at Tyr-66, a site that conforms to the consensus binding sequence for the Src homology 2 (SH2) domains of the adapter protein Grb2. This tyrosine phosphorylation is correlated with a 3-fold increase in PTP catalytic activity. These findings suggest that PTP1B selectively regulates specific activated receptor protein tyrosine kinases (RPTKs) in vivoand might itself be regulated by such receptors.